Invesco Euro Corporate Hybrid Bond UCITS ETF Dist

Issuer: Invesco

Asset Class: Fixed Income

TER: 39bps

Trading Currency: GBX

Pays Income: False

Listing Date: 24 Sep 2020

Ticker: EHYB

ISIN: IE00BKWD3966

This financial instrument offers exposure to the niche market of corporate hybrid bonds, which are complex securities possessing characteristics of both debt and equity. Typically issued by high-quality, investment-grade non-financial companies, these bonds are subordinated, meaning they rank below senior debt but above common equity in the issuer's capital structure. This subordination, combined with features like very long or perpetual maturities and issuer call options, results in higher yields compared to traditional senior corporate bonds, compensating investors for the additional risk. These instruments can serve as a potent tool for yield enhancement within a diversified fixed-income portfolio.

The fund is actively managed, meaning a dedicated team of portfolio managers makes the investment decisions rather than passively tracking an index. This approach allows for a dynamic strategy that can adapt to changing market conditions. The managers conduct in-depth credit analysis and assess macroeconomic trends to select what they believe are the most attractive hybrid securities denominated in euros. The active strategy aims to navigate the complexities and idiosyncrasies of the hybrid bond market, seeking to optimize the portfolio's risk-return profile and capitalize on opportunities that may be overlooked by passive strategies. This can be particularly valuable in a specialized asset class where issuer-specific factors are paramount.

This investment may be suitable for investors seeking higher income potential than is available from conventional investment-grade corporate bonds and who are willing to accept a greater level of risk, including subordination risk and potential for coupon deferral. It can act as a diversifier within a broader fixed-income allocation, sitting between traditional corporate debt and high-yield bonds on the risk spectrum. The active management provides a layer of professional oversight, potentially appealing to those who wish to access this market without conducting the intensive research required for individual security selection.