Invesco has launched an actively managed ETF that enables investors to participate in the performance of the Nasdaq-100 index and aims to deliver a consistent level of monthly income. The fund’s innovative approach also aims to provide investors with some downside mitigation from falls in the equity market. The Invesco Nasdaq-100 Income Advantage UCITS ETF uses the same proven methodology as the rest of the firm’s global Income Advantage range.
Matthew Tagliani, Head of EMEA ETF Product at Invesco , said: “While passive exposures are by far the largest segment of the ETF universe, we have seen growing demand for actively managed strategies. Last year, we launched six actively managed ETFs in Europe, raising US$1.1 billion in AUM, 15% of the industry’s total from newly launched active ETFs and the most of any provider in Europe. Our latest launch reflects a new type of active ETF, built around a core index-tracking approach to a popular benchmark and using an actively managed option strategy to more effectively meet certain investor needs.”
About the new Invesco ETF
The portfolio is constructed with a combination of passive management for the equity component, which seeks to track the Nasdaq-100 index, and active management for the option income overlay. The ETF aims to offer significant participation in the Nasdaq-100 index with added monthly income and lower volatility than the index.
Invesco ’s Global Strategies team will manage the income-generation component of the ETF and will be responsible for adjusting the allocation between the components to balance the provision of stable income, account for market movements, provide equity participation with less volatility relative to the index and provide downside mitigation.
John Burrello, Senior Portfolio Manager, Global Strategies at Invesco , said: “Our options-based income strategy allows us to not only generate cash flow but also to accommodate upside growth potential and downside risk mitigation. We will use an active and systematic approach designed to adapt to changing market environments while aiming to deliver a consistent balance of outcomes for our investors – stable monthly income, upside participation, and downside risk mitigation.”
Chris Mellor, Head of EMEA ETF Equity Product Management at Invesco , said: “Despite the relatively high monthly income that’s expected to be delivered by this ETF, the structure is intended to produce a total return that should appeal to many long-term investors. In particular, we believe the ETF could meet the needs of those investors wanting strong exposure to the popular Nasdaq benchmark and who are willing to trade some of the upside for an element of downside mitigation and a steady source of monthly income. It also has the advantage of the income from the option premia not exposed to the usual interest rate and company performance risks associated with traditional bond or dividend income strategies.”
This latest launch is the firm’s ninth Europe-listed ETF that provides exposure to Nasdaq indices, joining a range that includes physical and swap-based ETFs tracking the benchmark Nasdaq-100 index as well as an equal-weight version of that same index. Invesco ’s Nasdaq ETF range has over US$22 billion of assets under management.
