This is an actively managed intermediate-term bond ETF that does not track a specific index. Its core holdings are US investment-grade corporate bonds, Treasuries, and asset-backed securities (ABS and MBS), supplemented by selective allocations to high-yield and international bonds to widen the opportunity set for returns. Portfolio managers decide credit, maturity, and sector allocations directly.

Because it relies on active bond management rather than index tracking, it suits medium- to long-term investors seeking both income and capital gains.

Invesco launched the ETF in 2016, and it follows an active management approach.

Portfolio managers decide credit rating, maturity, and sector allocations directly. The fund centers on US investment-grade bonds and adds high-yield and international bonds as a complement. Adjusting interest rate and currency risk through derivative contracts also falls within its mandate.

• Authority to hold a broad range of bond types, unconstrained by an index
• An active strategy that manages multiple factors at once, including credit, interest rates, and currency

Assets under management (AUM) stand at $2.6B, and the expense ratio is 0.35% per year.

Its expense ratio is somewhat higher than passive ETFs in the same intermediate-term bond category, such as AGG and BND, but active management lets it reflect credit and sector opportunities flexibly. Its AUM ranks in the upper-middle range among active bond ETFs, so liquidity is stable.

In periods of large interest rate swings, the managers' ability to adjust duration can help defend returns. However, because the fund mixes investment-grade and high-yield bonds, it tends to face downward pressure on net asset value when credit spreads widen.

Capital tends to flow into active bond funds when expectations of rate stabilization build after inflation eases, and GTO is structured to benefit from this trend.

Its strength is an active strategy that can flexibly hold a variety of bond types, while its weaknesses are higher fees than passive funds and manager discretion risk.

The BNDX, IUSB, BINC, PYLD, and JCPB shown in the table are competing ETFs in the same intermediate-term bond category. Among them, IUSB is passively managed with relatively low fees, while BINC, PYLD, and JCPB are actively managed like GTO. For broader comparison beyond the table, options include AGG and BND, low-cost passive ETFs that track the US aggregate bond index, VCIT, which focuses on investment-grade corporate bonds, and FBND, Fidelity's active bond ETF.

These are the key points to verify before investing in GTO. Active bond ETFs carry a heavier fee burden than passive ones, and their credit allocation and duration shift at the managers' discretion, so advance review is important.

In a rising rate environment, bond prices face downward pressure, and if credit spreads widen, additional losses are possible depending on the high-yield weighting. Given the nature of an active fund, its performance may fall short of the benchmark.

It is a suitable choice for investors who want flexible active management across a variety of bond types. Those who prioritize cost can consider passive ETFs such as AGG and BND, and those who want to compare similar active strategies can also review FBND and BOND.