Research Affiliates’ Fundamental Index methodology uses fundamental measures of company size, including book value, sales, dividends and cash flow, to set constituent weights. PHB will normally invest at least 80% of its total assets in high-yield bonds that comprise the Index.
The Index measures potential returns of a theoretical portfolio of high yield, U.S. dollar denominated corporate bonds registered for sale in the United States whose issuers are public companies listed on a major U.S. stock exchange. The underlying index is rebalanced at the end of every month based on the index rules and weighted according to a composite RAFI weight that is calculated for each eligible company.
“By weighting companies based on fundamental measures of their resources available to service debt, we believe the PowerShares Fundamental High Yield Corporate Bond Portfolio represents a compelling alternative to market-cap-weighted fixed-income portfolios and provides investors the potential for improved risk-adjusted returns,” said Ben Fulton, Invesco PowerShares managing director of global ETFs, in the announcement.
The fund previously tracked the WellsFargo High Yield Bond Index.More information is at http://www.invescopowershares.com.