FAAR vs PHDG
FAAR vs PHDG
First Trust Alternative Absolute Return Strategy ETF vs Invesco S&P 500 Downside Hedged ETF
Quick Verdict
PHDG has a lower expense ratio. FAAR delivered stronger 1-year returns. PHDG offers more diversification with 494 holdings.
Side-by-Side Comparison
| Metric | FAAR | PHDG | Winner |
|---|---|---|---|
| Expense Ratio | 0.97% | 0.39% | |
| AUM | $191M | $61M | |
| Dividend Yield | 9.19% | 1.68% | |
| Holdings | 6 | 514 | |
| YTD Return | +13.94% | +13.02% | |
| 1Y Return | +19.26% | +18.49% | |
| 3Y Return (annualized) | +8.78% | +9.60% | |
| 5Y Return (annualized) | +7.33% | +4.75% | |
| Volatility (annualized) | 9.2% | 9.9% | |
| Max Drawdown | -18.8% | -23.6% | |
| Fund Family | First Trust Portfolios (US) | Invesco (US) | |
| Category | Commodity | Equity | |
| Inception | May 18, 2016 | Dec 5, 2012 |
FAAR vs PHDG Performance
First Trust Alternative Absolute Return Strategy ETF (FAAR) is a ETF from First Trust Portfolios (US) and Invesco S&P 500 Downside Hedged ETF (PHDG) is a ETF from Invesco (US). Over the past year FAAR returned +19.26% while PHDG returned +18.49%. Year to date, FAAR is up 13.94% versus a gain of 13.02% for PHDG.
Over three years, FAAR compounded at +8.78% per year against +9.60% for PHDG; over five years the annualized figures are +7.33% and +4.75% respectively. Across the full 10-year window we track, PHDG has the edge at +4.45% annualized vs +3.32%. Past performance does not guarantee future results.
Risk: Volatility and Drawdowns
PHDG has been the more volatile fund, with annualized monthly volatility of 9.9% compared with 9.2% for FAAR. Lower volatility generally means a smoother ride, though it often comes with lower long-run returns.
The deepest peak-to-trough decline in our data was -18.8% for FAAR and -23.6% for PHDG. Drawdown depth is worth weighing if you expect to sell during market stress rather than ride it out.
The two funds' monthly returns correlate at 0.15. They move independently enough that combining them can meaningfully diversify a portfolio.
Fees and Cost Over Time
FAAR charges 0.97% per year while PHDG charges 0.39%. On a $10,000 position that is $97 vs $39 annually, a gap of $58 per year that compounds over a long holding period. On income, FAAR currently yields 9.19% against 1.68% for PHDG.
Holdings Overlap
FAAR and PHDG share 0 holdings out of 495 unique holdings combined, representing a 0.0% weight overlap.
Moderate overlap means holding both could provide meaningful diversification benefits.
Frequently Asked Questions
Which is cheaper, FAAR or PHDG?
FAAR has an expense ratio of 0.97% while PHDG charges 0.39%. PHDG is the cheaper option. On a $10,000 investment, that is $58 per year of difference.
Which performed better, FAAR or PHDG?
Over the past year FAAR returned +19.26% vs +18.49% for PHDG, so FAAR leads on 1-year performance. Over the longest common window we track (10 years), FAAR annualized +3.32% vs +4.45% for PHDG. Past performance does not guarantee future results.
Which is riskier, FAAR or PHDG?
PHDG has been the more volatile fund at 9.9% annualized versus 9.2% for FAAR. Worst drawdown: FAAR -18.8% vs PHDG -23.6%.
Should I hold both FAAR and PHDG?
FAAR and PHDG have a monthly-return correlation of 0.15, so combining them can provide real diversification depending on your allocation goals.
What is the holdings overlap between FAAR and PHDG?
FAAR and PHDG share 0 common holdings with a 0.0% weight overlap. Combined, they hold 495 unique securities.
Which pays a higher dividend, FAAR or PHDG?
FAAR yields 9.19% while PHDG yields 1.68%, so FAAR currently pays the higher dividend yield.
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