Invesco Emerging Markets Sovereign Debt ETF

Invesco Emerging Markets Sovereign Debt ETF (PCY) tracks the DBIQ Emerging Markets USD Liquid Balanced Index, which is made up of U.S. dollar bonds from emerging-market governments. As of July 31, 2026, each bond was roughly 1% of the fund, so smaller borrowers like Angola, Nigeria and El Salvador carry real weight. Its bonds also run longer than peers'. It pays a higher yield, 6.21% as of October 27, 2026, but charges more than similar funds: 0.50% a year.

• Over the year to Oct 27, 2026, PCY returned -2.3%, 8th of 8 among similar funds.
• Its 5-year annualized return was +0.8%.
• Its worst full calendar year was 2022 (-24.4%); its best was 2023 (+18.4%).
• The deepest fall in its price history was 37.3% (Dec 31, 2020 to Oct 20, 2022), recovered by Sep 11, 2025.

As of Jul 31, 2026, the fund held 102 securities; the ten largest made up 11.45% of assets, and 4.35% sat in cash and money-market holdings.

The bonds mature in 20.1 years on average (weighted by size), with an average coupon of 6.13%.

• Over the three months to Jul 31, 2026, investors added a net $53.9M (creations minus redemptions, per the N-PORT report).
• Monthly total returns reported for that quarter: +1.07%, +1.04%, -2.98%.

PCY tracks the DBIQ Emerging Markets USD Liquid Balanced Index. Deutsche Bank Securities Inc. builds and maintains the index. It picks one to three bonds from each eligible emerging-market country. A government must issue or back each bond (a "sovereign" or "quasi-sovereign" bond). Each bond must also be priced in U.S. dollars, pay a fixed coupon (interest rate) and have at least $500 million outstanding. It generally needs at least three years left before it matures at each rebalancing. As of December 31, 2025, eligible countries ranged from Poland, Chile and Saudi Arabia to Pakistan, Egypt and Angola, and the index held 95 bonds.

The fund doesn't buy every bond in the index. It uses "sampling," which means holding a representative selection, and keeps at least 80% of its assets in index bonds. As of July 31, 2026, it held 102 bonds at roughly 1% each. The largest, a Republic of Poland bond, was 1.46% of the fund, and the top 10 together made up 11.45%.

Because the bonds are in dollars, swings in local currencies don't hit the fund directly. U.S. interest rates and each country's ability to repay do. Holdings averaged 20.1 years to maturity, versus about 11 years at most peers, so the fund's price reacts more to rate changes. The prospectus also warns of junk bond risk: some issuers are more likely to default.

• PCY charges 0.5% a year, versus an average of 0.31% for the similar funds below (8th of 8, cheapest first).
• Using the prospectus's standard example, $10,000 invested would cost about $51 in the first year and $629 over 10 years (assuming a 5% annual return).

PCY pays high monthly income, but its long-dated, higher-risk government bonds have produced deep, slow-to-heal losses, so it fits better as a small slice than a core bond holding.

PCY could add monthly income from bonds outside the U.S.: its yield over the past 12 months was 6.21% as of October 27, 2026. The trade-off is deep drops that took years to recover. Its price history starts in June 2020, so it doesn't show how the fund did in the 2008 crisis or the 2020 crash. In the 2022 bear market it fell 32.3% between January and September 2022. Its deepest drop, 37.3% from December 2020 to October 2022, took about 35 months to recover, and its official 2022 return was −23.4%. A retiree who sold shares to cover spending in a stretch like that would have locked in losses. Costs are 0.50% a year. Under the SEC's standard example on $10,000, that's $51 in year one and $629 over 10 years. Past results don't predict the future, and a plan should look at the whole portfolio, not one fund.

Matched by bond funds with the closest average maturity and issuer mix (N-PORT).