Invesco ETF launches three thematic ETFs capitalising on key long-term trends

Invesco ETF announces the launch of three thematic ETFs designed to provide investors with targeted access to the long-term growth trends in artificial intelligence (AI), cyber security and defence.

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By ETFWorld.co.uk

Gary Buxton, Head of ETFs and Index Strategies for EMEA and APAC at Invesco

Each of the new ETFs will track innovative global benchmarks constructed by Kensho, the specialist arm of S&P Global Indices with expertise in AI and other next-generation technologies.

    The Invesco Artificial Intelligence Enablers UCITS ETF will target companies focused on developing and deploying the technology, infrastructure and services that enable the growth and functionality of AI.

    The Invesco Cybersecurity UCITS ETF will target companies that focus on protecting businesses and devices from unauthorised access by electronic means.

    The Invesco Defence Innovation UCITS ETF will target companies developing advanced weapons and defence systems and solutions to secure borders.

Gary Buxton, Head of ETFs for EMEA and Asia-Pacific at Invesco, says: ‘While the potential of AI has really taken hold, cyber security and defence solutions are now gaining ground as threats emerge around the world. For investors, the question is how best to seize these opportunities now and in the future. We chose to work with Kensho because of their ingenious approach to the application of AI, but also because of their deep understanding of these rapidly evolving new technologies. In addition, Kensho’s membership of the S&P Global Index group should give investors a greater degree of confidence in the administration.’

Each index is constructed from a global universe of stocks. Kensho uses Natural Language Processing (NLP) to identify companies that are likely to be exposed to the key concepts associated with each theme. Kensho’s analysts then evaluate each of the companies identified and assign them a thematic exposure accordingly.

The Artificial Intelligence and Cybersecurity theme indices apply ESG filters to exclude companies that are involved in certain controversial activities, do not respect the principles of the United Nations Global Compact or have ESG scores in the bottom 10% of the S&P Global BMI index.

Thibaud de Cherisey, Head of ETF Distribution EMEA at Invesco, added: ‘Our new thematic ETFs stand out for several key reasons. The first is cost. At 0.35% per annum, they have the lowest – or equal – annual fees among competing products. The second factor is the expertise of the index provider. Finally, our ETFs focus on the companies that are most committed and capable of making an impact for investors’.

The eligible companies identified and assessed by Kensho analysts are divided into two categories. Companies in the ‘Core’ category are those that derive a significant proportion of their business activities and/or revenues from products and services aligned with the theme. Non-Core’ companies are those that operate across the theme’s wider value chain, supplying essential elements such as sub-components required for the end products aligned with the theme, but which do not focus on supplying these end products themselves.

An overweight factor is applied to the Core group to increase overall exposure to these stocks and to emphasise pure innovation. Within each group, companies are equally weighted, subject to diversification and liquidity constraints.

These three new ETFs extend Invesco’s thematic offering, which includes ETFs targeting blockchain technologies, biotechnologies and renewable energies.

ETF characteristics

Source: ETFWorld.co.uk