Invesco Launches Active Nasdaq-100 ETF with Options Strategy for Monthly Income

Invesco has expanded its suite of European-listed exchange-traded funds with the launch of the Invesco Nasdaq-100 Income Advantage UCITS ETF.

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By ETFWorld.co.uk

Matthew Tagliani, Head of ETF Product EMEA at Invesco

The new fund, which began trading on the London Stock Exchange today, aims to provide investors with monthly income and reduced volatility compared to the standard Nasdaq-100 Index.

The fund is structured as an actively managed ETF. It employs a hybrid strategy that combines a passive equity holding with an actively managed options overlay designed to generate recurring cash flow.

ETF Product Strategy and Structure

The ETF’s objective is to generate income while providing participation in the equity market’s gains and some protection during downturns. It plans to achieve this through a specific two-component structure.

• Equity Component: Between 70% and 85% of the portfolio will be physically invested in the securities that comprise the Nasdaq-100 Index.

• Income Generation Component: The remaining 15% to 30% of assets will be held in cash or cash equivalents. This portion is used to implement covered call and cash-secured put option strategies.

The premia collected from selling these options are intended to be the primary source of the fund’s monthly dividend distribution. According to Invesco, this options-based income is not directly exposed to the interest rate or corporate performance risks associated with traditional bond or dividend income strategies.

A sub-investment manager will actively adjust the allocation between the two components and manage the options strategy. The goal of this active management is to balance stable income generation with market participation and downside mitigation.

Executive Commentary on Market Demand and Strategy

Invesco executives positioned the new launch as a response to growing investor demand for sophisticated, outcome-oriented strategies within the ETF wrapper.

Matthew Tagliani, Head of ETF Product EMEA at Invesco, stated: “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, gathering $1.1 billion in AUM—that’s 15% of all the industry’s total from new active ETFs and the most of any provider in Europe. Our latest launch reflects a new type of active ETF, built around a core approach that replicates a very popular benchmark and uses an actively managed options strategy to more effectively meet certain investor needs.”

John Burrello, Senior Portfolio Manager, Global Strategies at Invesco, explained the tactical approach: “Our options-based income strategy allows us to not only generate cash flows but also to harness upside growth potential and mitigate downside risk. We will adopt an active and systematic approach, designed to adapt to changing market scenarios, while aiming to ensure a constant balance of outcomes for our investors: stable monthly income, upside participation, and containment of downside risk.”

Chris Mellor, Head of Equity ETF Product Management EMEA at Invesco, outlined the target investor: “Despite the relatively high monthly income flow expected from this ETF, the structure is designed to produce a total return that should attract many long-term investors. In particular, we believe the ETF can meet the needs of investors who want strong exposure to the renowned Nasdaq benchmark and are willing to forgo some of the upside potential in exchange for downside mitigation and a steady source of monthly income.”

Market Context and Invesco’s Nasdaq Suite

This launch marks Invesco’s ninth Europe-listed ETF offering exposure to Nasdaq indices. The firm’s existing Nasdaq ETF range includes physical and swap-based products tracking the Nasdaq-100, as well as an equal-weight version of the index. Collectively, these funds have over $22 billion in assets under management.

The new Income Advantage ETF enters a competitive landscape. For comparison, Invesco’s well-established, purely passive EQQQ Nasdaq-100 UCITS ETF, listed in Milan, carries an expense ratio of 0.30%. The new active strategy is priced competitively within this range.

A key distinction for investors is that this is an actively managed fund.

Shares denominated in euros (Xetra, Euronext Milan) and Swiss francs (SIX Swiss Exchange) are also available. On the LSE, a GBP-denominated share class trades under the ticker QQIS.

Source: ETFWorld.co.uk