Invesco launches two new ETFs on the LSE

Invesco launches today two new ETFs on the London Stock Exchange

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By ETFWorld.co.uk

Chris Mellor, Head of EMEA Equity ETF Product Management at Invesco

The Invesco Bloomberg Commodity Carbon Tilted UCITS ETF aims to provide the total return performance of the Bloomberg Commodity Carbon Tilted Index, less the impact of fees.

The Reference Index is a variant of the Bloomberg Commodity Index that comprises the same futures on the same component commodities as the Parent Index and seeks to incorporate a measure of the environmental costs associated with the production of the underlying commodities referenced by each futures contract. To group commodities with comparable production processes, the constituent commodities in the Reference Index are organised into seven groups: industrial metals, precious metals, agriculture derived, agriculture ex-derived, livestock, primary energy and distillates.

The Reference Index takes into account the Greenhouse Gas emissions associated with the production of the underlying commodity and applies tilting such that the lower GHG emitting commodities relative to their group are overweighted, and the higher GHG emitting commodities are underweighted, when compared to the Parent Index. The application of tilting facilitates a balanced contribution to the aggregate reduction by all groups given the GHG emissions profile of each commodity group varies. The Reference Index is rebalanced on an annual basis.

To achieve the investment objective, the fund will use unfunded swaps, which are agreements between the fund and an approved counterparty to exchange one stream of cash flows, against another stream. The performance of the Reference Index is swapped to the fund in exchange for an agreed rate of return reflective of US Treasury Bill market rates. The fund holds a diversified basket of US Treasury Bills and may be required to provide or receive collateral for any difference in the performance of the Reference Index to the return of the US Treasury Bills.

Source: ETFWorld.co.uk