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Fixed Income ETFs
Real Estate Debt
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SMAs
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Income Advantage
When bond markets seized-up during the pandemic, fixed income ETFs went through their first proper liquidity crisis – and passed with flying colors.¹ That resilience is helping drive a wave of inflows into these strategies. Learn how Invesco’s expertise in fixed income investing and ETF innovation can help you navigate this sea change.
Ride the Fixed Income ETF wave
Find Out More
FIXED INCOME
Taking advantage of private real estate can optimize a portfolio‘s growth and income potential, enhance diversification, and help to hedge against inflation. But navigating the risks and opportunities requires deep and varied experience. You need a partner that can provide expertise on both sides of the balance sheet: real estate debt and equity.
Private real estate: Choosing the right partner
REAL ESTATE
With advances in technology driving minimum account sizes lower, separately managed accounts (SMAs) are becoming the go-to solution to deliver customization at scale. Over the next four years, Cerulli Associates expects to see annual double-digit growth in SMA assets.¹ Discover how investors could benefit from the premier tool for personalized and tax-optimized portfolios.
SMAs: Don’t just manage taxes. Optimize them.
Investors want certain income in an uncertain world. Amid uncertainty, investors are seeking reliable income as well as the growth potential of equities. Inspired by QQQ and RSP, our two new ETFs have added features designed to provide consistent income.
The ETFs you trust: Now designed with an income advantage
Wave 5
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model portfolios
As financial professionals seek new and innovative strategies to scale their business and deliver value to clients, model portfolios are increasingly being sought to address these needs. Since 2019, the number of advisors transitioning to model portfolios has grown by 285%¹ and is only expected to rise in coming years. Discover how to capitalize on this shift and turn our model portfolio expertise into your edge.
Model Portfolios: Turn our expertise into your edge
Model Portfolios
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ETF insights
Explore Invesco’s latest insights on investment opportunities and potential ways to use ETFs in a portfolio.
Article
Insights
Invesco Fixed income SMAs
We’re passionate about helping investors unlock the power of customization for their fixed income portfolios through Custom SMAs by Invesco.
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video
Invesco Fixed income ETFs
The growing universe of fixed income ETFs gives investors more options for accessing bond markets.
Whether it’s designing a new product, finding alternative ways to engage with colleagues and clients, or harnessing new technology the Invesco ETF team knows how to innovate. In this video Brian McMullen, fixed income ETF strategist, talks stress tests, building track records and earning trust.
A behind the scenes look at Invesco’s ETF ecosystem
INTERVIEW
You’ve been an innovator for a while, making the case for fixed income ETFs when the market wasn’t really pushing for them. What has that experience taught you? Patience and perseverance. We’re one of the largest fixed income ETF providers in the market and unlike other issuers, we compete on value rather than price. We’re not interested in being the lowest-cost provider. There’s certainly a place for that, but it’s not for us. Our focus is having a long-term vision and our conviction has borne fruit for our clients.
Unlike retail investors, institutional investors seem to be waking up to fixed income ETFs. Why is that? Institutions are moving large amounts of money in short amounts of time. When you get to that size and scale, you want to make sure your investment vehicle is something you trust. Over the course of the pandemic, fixed income ETFs have proven themselves worthy of that trust. Institutional investors have pushed the throttle forward ever since. Where do you see fixed income ETFs within a portfolio? Our clients use fixed income ETFs in a several ways to express various investment views. An institutional client might use them in a supplemental way to get access to a part of the market they don’t feel that confident about. We also see clients use them more tactically, in the form of a fixed income ETF that has an active options market. What about using fixed income ETFs as an alternative to cash allocations? That’s one of the most interesting adoptions we’ve seen over the last five years. For example, a senior loan manager who typically has anywhere from 2% to 5% of cash in their portfolio for liquidity purposes, which can potentially drag down performance, can use a fixed income ETF to give them liquidity and market exposure.
Learn more about Invesco’s ETF lineup
Brian McMullen Fixed Income ETF Strategist
“Over the course of the pandemic, fixed income ETFs have proven themselves worthy of trust.”
Brian McMullen, Fixed Income ETF Strategist
Fixed income ETF strategist Brian McMullen talks to Citywire about Invesco’s deep-rooted hunger for innovation, the rising popularity of fixed income ETFs and the importance of sticking to your principles.
Patience
&
perseverance:
Invesco ETFs | Invesco US
Demand surges for fixed income ETFs
Although the first fixed income ETF was launched eight years after its equity counterparts, fixed income ETFs are now projected to grow at a similar rate, with assets on pace to hit $5T by 2030.⁴ What’s more, the pandemic proved to be a much-needed stress test for fixed income ETFs. When the underlying bond markets seized up during the pandemic, fixed income ETFs behaved exactly as they were supposed to—providing investors with liquidity when they needed it most.
Extensive ETF experience
Many investors are familiar with our equity ETF experience, but you may not know our fixed income ETF history. We launched the first alternatively weighted fixed income ETF in 2007, and were the first issuer to launch a bank loan ETF in 2011. But we’re not content to rest on our history. We’re constantly thinking about new ways to differentiate our product range to serve our clients.
Invesco Investment Grade BulletShares
Explore how BulletShares can help provide targeted exposure to investment grade bonds.
Invesco BulletShares ETFs
Target Maturity
Invesco Equal Weight 0-30 Year Treasury ETF (GOVI)
Learn more about our ‘value’ approach to investing in the US Treasury market.
Invesco Equal Weight 0-30 Year Treasury ETF
Access
Total Return Bond ETF (GTO)
Provide portfolios with enhanced income and return potential relative to traditional core fixed income products.
Invesco Total Return Bond ETF
Active Management
Invesco High Yield BulletShares
Discover how defined maturity strategies can be helpful tools for navigating volatile interest rates.
Invesco Senior Loan ETF (BKLN)
Provide high income potential, rising rate protection, and diversification by investing in senior loans.
Invesco Senior Loan ETF
Invesco Variable Rate Investment Grade (VRIG)
Diversify portfolios from traditional bonds by holding a core allocation to non-agency residential and commercial mortgage
Invesco Variable Rate Investment Grade ETF
Featured Products
Actively managed fixed income ETFs attempt to outperform a benchmark index.
Subheader
Access to “non-core” segments of fixed income markets that are not included in aggregate indexes and/or uses a smart beta index methodology.⁵
Defined maturity ETFs provide investors a targeted duration exposure and more predictable outcomes relative to traditional fund.
Invesco Fixed Income ETFs are designed to provide “Intelligent Income,” featuring strategies that provide targeted duration exposure, enable access to non-core areas of the market, and strive to outperform through active management.
Intelligent Income
Powered by a rigorous, repeatable process that consistently identifies new themes and opportunities.
Mutual funds
Offer exposure to diverse fixed income sectors through active and index-based management styles.
Exchange-traded funds
Allow financial professionals to create tax-smart, diversified fixed income portfolios that can be customized to match clients’ views, values, tax situation, and liquidity needs.
Separately managed accounts³
And our strategies are available in the solution that works best for your needs.
Fixed income for every outcome
$520B
years of experience, on average
fixed income professionals
in client assets²
182
18
Whether you’re looking for income, diversification, capital preservation or total returns, our global fixed income teams have the strategies, scale, and flexibility needed to match your objectives.
A conversation with our expert
Find out more
Interview
Video
Key Takeaways
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The information on this site does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial advisor/financial consultant before making any investment decisions. Name/Ticker/Index Change Disclosures GOVI: Effective on Aug. 25, 2023, the Fund's name, ticker, underlying index, index provider, investment objective and investment strategy changed. The Fund's name and ticker changed from Invesco 1-30 Laddered Treasury ETF (ticker: PLW) to the Invesco Equal Weight 0-30 Year Treasury ETF (ticker: GOVI). The Fund's Index Provider changed from NASDAQ OMX Group, Inc. to ICE Data Indices, LLC. and its Underlying Index changed from the Ryan/Nasdaq U.S. 1-30 Year Treasury Laddered Index to the ICE 1-30 Year Laddered Maturity US Treasury Index; and as a result, the Fund's objective and strategy changed to seek to track the investment results of the new Underlying index by investing at least 80% of its total assets in securities that comprise the new Underlying Index. About Risk There are risks involved with investing in ETFs, including possible loss of money. Index-based ETFs are not actively managed. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Both index-based and actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance. Ordinary brokerage commissions apply. The Fund's return may not match the return of the Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund. Shares are not individually redeemable and owners of the Shares may acquire those Shares from the Fund and tender those Shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 10,000, 20,000, 25,000, 50,000, 80,000, 100,000 or 150,000 Shares. Fixed-income investments are subject to credit risk of the issuer and the effects of changing interest rates. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. An issuer may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer’s credit rating. Before investing, investors should carefully read the prospectus/summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the Fund call 800 983 0903 or visit invesco.com for the prospectus/summary prospectus. Invesco Managed Accounts LLC (IMA) is an investment adviser; it provides investment advisory services to individual and institutional clients and does not sell securities. Invesco Distributors, Inc. is the U.S. distributor for Invesco's retail products and private placements. Both are indirect, wholly owned subsidiaries of Invesco Ltd. Citywire and Invesco are not affiliated. NOT FDIC INSURED | MAY LOSE VALUE | NO BANK GUARANTEE
1 Source: Risk & Reward: Research and Investment Strategies, Invesco, 3rd issue 2021. Research by Invesco covering January through June 2020 shows that fixed income ETFs served as price discovery instruments for investors as they supported heavy intraday trading volume relative to over-the-counter bond markets. 2 As of March 31, 2024 3 Fixed Income SMAs are available from Invesco Managed Accounts, LLC. 4 Source: Bloomberg L.P. as of March 31, 2023 5 Smart Beta represents an alternative and selection index-based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both. Smart beta portfolios may underperform cap-weighted benchmarks and increase portfolio risk.
Patience and perseverance:
Swipe to explore.
Bert Crouch, Portfolio Manager and Head of North America at Invesco Real Estate, talks about where we are in the cycle, why real estate debt looks particularly attractive, and why now may potentially be an opportune entry point for investors.
Why now for real estate?
A world of experience
$86.4B
years of real estate experience
professionals across 21 global offices
real estate assets globally
607
40
Invesco Real Estate has a decades-long track record of building global real estate investment programs with specialist capabilities, backed by the resources of a large, diverse asset manager ¹
Our process
Cerulli research
Experience
1 Source: Invesco Real Estate as of March 31, 2024 2 There may be material differences in the investment goals, liquidity needs, and investment horizons of individual and institutional investors. Investors should consult with a financial professional regarding their own situation and risk tolerance before making any investment decisions. 3 Source: Estimates by Price Waterhouse Coopers, 2023. Latest data available. 4 Source: Invesco Ltd. AUM of $1,795.6 billion USD as of September 30, 2024. AUM figure includes all assets under advisement, distributed and overseen by Invesco. 5 Property images shown are current investment properties of Invesco and are meant to illustrate the different types of properties owned by Invesco Real Estate. 6 Not all strategies may be available to all investors. 7 Trailing 5-years of data, last 5 years of quarterly returns annualized 2019Q1-2023Q4, latest data available. Source: Invesco Real Estate using data from the following indices: Direct Lending – Cliffwater Direct Lending Index, Private Real Estate Debt – Giliberto-Levy High-Yield Real Estate Debt Index (G-L 2), High Yield – Bloomberg US Corporate High Yield Index, Senior Loans – Morningstar LSTA Leverage Loan 100 Index, Private Real Estate Equity – NCREIF Property Index, Corporate Bonds – Bloomberg U.S. Corporate Total Return Value Unhedged USD Index, CMBS – Bloomberg US CMBS Investment Grade Index, Investment Grade Bonds – Bloomberg U.S. Aggregate Total Return Index, Treasuries – Bloomberg U.S. Treasury Total Return Unhedged Index. Past performance is not indicative of future results. An investment cannot be made into an index. There is no guarantee that any trends shown herein will continue. 8 For illustrative purposes only. Capital stack is the layers of funding provided on a real estate investment. Relative risk within the capital stack tends to be associated with payment priority of various positions within the capital stack. The two broadest categories of the real estate capital stack are equity and debt, with debt typically receiving senior priority on loan repayments. 9 Source: Green Street Advisors, Bureau of Labor Statistics as of June 30, 2024. Net operating income (NOI) growth is the average NOI growth by year across the major property sectors in North America: apartment, industrial, mall, office and strip retail. NOI growth equals all revenue from a property minus all reasonably necessary operating expenses. NOI growth may not be correlated to or continue to keep pace with inflation. Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a representative basket of goods and services. 10 Sharpe Ratio: A measure of an investment’s risk-adjusted performance, calculated by comparing its return to that of a risk-free asset. Trailing 5-years of data, last 5 years of quarterly returns annualized 2019Q3-2024Q2, latest data available. Source: Invesco Real Estate using data from the RE Credit - Gilberto-Levy 2 Commercial Mortgage Index, Direct Lending– Cliffwater Direct Lending Index, Investment Grade Bonds – Bloomberg U.S. Aggregate Total Return Index, High Yield – Bloomberg US Corporate High Yield Index , Senior Loans – S&P/LSTA Leverage Loan TR, Treasuries – Bloomberg U.S. Treasury Total Return Unhedged Index, Corporate Bonds – Bloomberg U.S. Corporate Total Return Value Unhedged USD Index, CMBS – Bloomberg CMBS Total Return Index Value, Private RE – NCREIF Property Index. Past performance is not indicative of future results. Diversification does not guarantee a profit or eliminate the risk of loss. 11 Commercial Mortgage-Backed Securities (CMBS) 12 Correlation: statistic that measures the degree to which two variables move in relation to each other. Trailing 5-years of data, last 5 years of quarterly returns annualized 2019Q1-2023Q4, latest data available. Source: Invesco Real Estate using data from the RE Credit - Gilberto-Levy 2 Commercial Mortgage Index, Direct Lending– Cliffwater Direct Lending Index, Investment Grade Bonds – Bloomberg U.S. Aggregate Total Return Index, High Yield – Bloomberg US Corporate High Yield Index , Senior Loans – S&P/LSTA Leverage Loan TR, Treasuries – Bloomberg U.S. Treasury Total Return Unhedged Index, Corporate Bonds – Bloomberg U.S. Corporate Total Return Value Unhedged USD Index, CMBS – Bloomberg CMBS Total Return Index Value, Private RE – NCREIF Property Index. Past performance is not indicative of future results. Diversification does not guarantee a profit or eliminate the risk of loss. 13 Source: Cerulli Associates, in partnership with the Investments & Wealth Institute Not a Deposit | Not FDIC Insured | Not Guaranteed by the Bank | May Lose Value | Not Insured by any Federal Government Agency The information on this site does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions. About risk Investments in real-estate related instruments may be affected by economic, legal, or environmental factors that affect property values, rents or occupancies of real estate. Real estate companies, including REITs or similar structures, tend to be small and mid-cap companies, and their shares may be more volatile and less liquid. Investing in commercial real estate assets involves certain risks, including but not limited to: tenants' inability to pay rent; increases in interest rates and lack of availability of financing; tenant turnover and vacancies; and changes in supply of or demand for similar property types in a given market. Alternative investment products, including hedge funds and private equity, involve a high degree of risk, often engage in leveraging and other speculative investment practices that may increase the risk of investment loss, can be highly illiquid, are not required to provide periodic pricing or valuation information to investors, may involve complex tax structures and delays in distributing important tax information, are not subject to the same regulatory requirements as mutual funds, often charge high fees which may offset any trading profits, and in many cases the underlying investments are not transparent and are known only to the investment manager. There is often no secondary market for hedge funds and private equity, and none is expected to develop. There may be restrictions on transferring interests in such investments. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. An issuer may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer’s credit rating. The values of junk bonds fluctuate more than those of high quality bonds and can decline significantly over short time periods. Most senior loans are made to corporations with below investment-grade credit ratings and are subject to significant credit, valuation and liquidity risk. The value of the collateral securing a loan may not be sufficient to cover the amount owed, be found invalid or used to pay other outstanding obligations. The loan's collateral may be difficult to liquidate, or a majority of the collateral may be illiquid. Treasury securities are backed by the full faith and credit of the US government as to the timely payment of principal and interest. Mortgage- and asset-backed securities are subject to prepayment or call risk, which is the risk that the borrower’s payments may be received earlier or later than expected due to changes in prepayment rates on underlying loans. Securities may be prepaid at a price less than the original purchase value. The opinions expressed are those of Invesco Real Estate or Bert Crouch and are based on current market conditions which are subject to change without notice. These opinions may differ from those of other Invesco investment professionals. Invesco Distributors, Inc. is the U.S. distributor for Invesco's retail products and private placements. Invesco is not affiliated with Citywire and Cerulli Associates Important Index Information Direct Lending is represented by the Cliffwater Direct Lending Index (CDLI) which seeks to measure the unlevered, gross of fee performance of U.S. middle market corporate loans, as represented by the asset-weighted performance of the underlying assets of Business Development Companies (BDCs), including both exchange-traded and unlisted BDCs. Private Real Estate Equity is represented by the NCREIF Property Index (the “NPI”) on the basis that the NPI is the broadest measure of private real estate index returns. The NPI is published by the National Council of Real Estate Investment Fiduciaries and is a quarterly, composite total return (based on appraisal values) for private commercial real estate properties held for investment purposes including fund expenses but excluding leverage and management and advisory fees. The NPI excludes leverage and therefore is less volatile than real estate vehicles, which employs leverage. All properties in the NPI have been acquired, at least in part, on behalf of tax-exempt institutional investors and held in a fiduciary environment. NCREIF data reflects the returns of a blended portfolio of institutional quality real estate and does not reflect the use of leverage or the impact of management and advisory fees. Investment Grade Bonds are represented by the Bloomberg US Aggregate Bond Index, an index of securities that covers the US investment grade fixed rate bond market, with index components for government and corporate securities, mortgage pass-through securities and asset-backed securities; and is subject to credit risk. CMBS are represented by the Bloomberg US CMBS Investment Grade Index which measures the market of US Agency and US Non-Agency conduit and fusion CMBS deals with a minimum current deal size of $300mn. Treasuries are represented by the Bloomberg U.S. Treasury Unhedged Index which measures US dollar-denominated, fixed-rate, nominal debt issued by the US Treasury. Treasury bills are excluded by the maturity constraint but are part of a separate Short Treasury Index. STRIPS are excluded from the index because their inclusion would result in double-counting. Private Real Estate Credit is represented by the Giliberto-Levy Commercial Mortgage Performance Index (the “G-L 1”) which measures the investment performance of select private-market investments in commercial real estate debt. The G-L 1 Index is comprised of fixed-rate commercial mortgage loans held on balance sheets of institutions such as life insurance companies and pension funds. G-L 1 Index returns are based on a market-value-weighted blend of office, apartment, retail, industrial, lodging, mixed-use and other miscellaneous property types. G-L 1 Index performance tracks senior loans only; it does not include construction loans, mezzanine and other subordinate instruments and bridge loans made by such institutions. Private Real Estate Debt is represented by the Giliberto-Levy High-Yield Real Estate Debt Index (G-L 2) which measures total return and its components for many forms of high-yield CRE debt, such as high-yield commercial mortgage debt performance for high-yield loans, such as mezzanine loans, preferred equity and "B" notes. Corporate Bonds are represented by the Bloomberg U.S. Corporate Value Unhedged USD Index which measures the investment grade, fixed-rate, taxable corporate bond market. It includes USD denominated securities publicly issued by US and non-US industrial, utility and financial issuers. High Yield is represented by the Bloomberg US Corporate High Yield Bond Index which measures the USD-denominated, high yield, fixed-rate corporate bond market. Senior Loans are represented by the Morningstar LSTA US Leveraged Loan 100 Index which is designed to measure the performance of the 100 largest facilities in the US leveraged loan market. US Equity is represented by S&P 500 Index, an unmanaged index of the 500 largest stocks, weighted by market capitalization and considered representative of the broader stock market. Public real estate, bonds, treasuries and equities provide ready liquidity and are easily traded. The indexes mentioned above are meant to illustrate general market performance and it is not possible to invest directly in an index. The prices of securities represented by these indexes may change in response to factors including: the historical and prospective earnings of the issuer, the value of its assets, general economic conditions, interest rates and investor perceptions. All indexes are unmanaged and do not include the impact of fees and expenses. Comparisons shown are for illustrative purposes only and do not represent specific investments or the performance of private real estate credit. Investment grade bonds and high yield bonds are typically issued in $1,000 or $5,000 denominations and when purchased as a new issue, are not subject to fees or expenses. Leveraged loan denominations are negotiated by the issuer and arranger and typically are subject to fees and expenses. While the liquidity of assets in public markets depends on its credit rating and market conditions, there exists a secondary market for such bonds. Furthermore, issuers of investment grade bonds and high yield bonds are contractually obligated to pay periodic interest and repay a fixed principal amount at maturity.
The quiet giant
Once reserved for institutional investors, alternative investment strategies are becoming increasingly accessible to retail investors.² Investing in real estate is the very manifestation of active management – whether you’re the purchaser or the lender. Investing in a physical asset that can be renovated or improved can never be passive. These asset classes are estimated to double in size to $21.1tn by 2025, accounting for 15% of global AUM.³
Read the full report
Advisors told Cerulli that they’re planning to increase allocations to alternative investments, with optimal allocation 38% higher than current levels.
In 2023, Cerulli Associates, in partnership with the Investments & Wealth Institute, surveyed more than 200 advisors on their use of alternative investments and conducted 25 research calls to gather qualitative insights. Advisors identified ways an expanded shelf of alternative investments – such as private real estate – could help enhance their business.
Advisors are looking to private markets to differentiate their practice
EXPOSURE
Separate Accounts
Commingled & Institutional Funds
Wealth Management
Global Direct Real Estate ⁶
Core Income/Core-Plus Debt Value Added* Opportunistic**
* Value Added: A property that may offer an opportunity to increase cash flow through renovations or other operational efficiencies, with generally moderate-to-higher risk and target returns. ** Opportunistic: A real estate investing strategy that prioritizes upside while accepting the corresponding risk; generally higher risk and return targets.
Learn more about the team
With experts in 16 countries, Invesco Real Estate understands the local nuances that drive real estate opportunities. At the same time, every facet of our organization – from sourcing to due diligence and property valuation to risk management – is supported by the significant global resources of Invesco, a $1.8T asset management firm.⁴ Our access to capital, ability to execute and history of investing through multiple real estate cycles separates Invesco Real Estate from peers. We leverage our local and global expertise to create a comprehensive lineup of direct real estate strategies to help meet investors’ needs.
Experience in real estate matters
“Winston Churchill famously said,
‘never let a good crisis go to waste’
and that’s how we look at it. You don’t want to exploit it [economic downturns], but you do need to take advantage of the current environment … we’re really focused on three key areas. Number one is credit.”
Create optimal risk-return relationship
Portfolio Construction
STEP 3
Real Estate Equity
Security Selection
STEP 2
Real Estate Equity Versus Fixed Income
Capital Structure Allocation
STEP 1
Invesco House View
Portfolio Objectives & Constraints
Our strategies are supported by extensive research that is shared throughout the organization. Importantly, our fully integrated real estate platform is not siloed – our global research and property-level analysis is leveraged to create equity and debt strategies to meet the wide-ranging needs of our clients. Our 600+ strong team searches for opportunities across the real estate investing value chain and constructs portfolios with an optimal risk-return relationship.
quiet
The
giant
Expertise across equity and debt strategies
Bert Crouch Managing Director, Head of North America, Invesco Real Estate
Opportunity in real estate credit
Higher interest rates, reduced basis, and tighter bank regulations are potential positives for commercial real estate (CRE) credit and why we see opportunity. November 14, 2024
By Michael Sobolik
Private credit
Can remarkable US industrial revenues continue?
Historical increases in US industrial rents have out-performed past trends. Can that run continue? We look at e-commerce and interest rates for an answer. November 4, 2024
Why compliment direct lending with real estate debt?
Private credit, including real estate debt and direct lending, offers diversification and low volatility, making it an attractive option for investors seeking optimized portfolios. October 21, 2024
By Brian Levitt
Alternatives
Optimize
Strengthen your investment process and portfolio outcomes with a range of products and expert guidance.
Enhance
Optimize your team’s performance in a complex, competitive environment.
Connect
Our time-tested strategies can help you educate and encourage stakeholders to take the next step in private markets investing.
Integrating alternative investments can be complex and challenging, but Invesco is here to help. Through our Total Client Experience (TCX) platform, we can help clients in three key ways:
Our commitment to you
Our real estate portfolio is diversified across sectors including healthcare, multifamily, industrial, self-storage, retail, and student housing. Take a look at a few of our featured properties: ⁵
Check out Invesco’s real estate investments
GALLERY
Potential inflation hedge
Floating rate debt adjusts in a rising rate environment, maintaining attractive relative income return potential.
Position in the capital stack
Debt position is relatively more senior against capital value movements on the underlying property.
Income potential
Debt positions focus on securing a stated rate of return through interest, fees and repayment terms.
Current market conditions have created potential opportunity to originate attractive loans with robust credit and structuring profiles, with a premium to recent historical pricing.
Commercial real estate debt?
NoHo Flats
Multifamily
TAMPA, FL
Bend Self Storage
Self Storage
BEND, OR
Sunbelt Medical Office Portfolio
Medical Office
CA, CO, FL, TN, TX
Legacy West
Multi/Retail/Office
PLANO, TX
The Shops at Crystals
Retail
LAS VEGAS, NV
Tempe Student Housing
Student Housing
TEMPE, AZ
PROJECT
Over the past ten years, commercial real estate debt has demonstrated a leading Sharpe Ratio and limited correlation with other fixed income investments – including private real estate equity.
So what’s driving the opportunity now?
Higher interest rates
Interest rates are higher than pre-Covid 19 and expected to stay high in the long term, which should support yields.
Reduced property values
Real estate equity prices have fallen since early 2022, so new loan collateral values will likely be lower than previous peaks.
Tighter bank regulation
Proposed higher bank capital requirements could diminish bank lending, which non-bank lenders could fill.
13.3%
9.6%
INCREASE
38%
13
Commercial real estate debt has historically delivered enhanced income yields compared to traditional fixed income options
CHART
Illustrative capital stack ⁸
Real estate income has historically kept pace with inflation
Whole Loans
Equity
Full Capital Stack
65%
35%
Last
FIRST
Payment Priority
Payment priority goes towards the whole loan (senior and junior tranche) servicing first, with the residual going to the equity investors in the building.
(Whole Loan & Equity)
Return
Risk
Diversification
Little to no correlation to equities and lower volatility compared to most fixed income asset classes.
Past performance is not a guarantee of future results.
10
Cerulli Research
Three reasons to consider real estate credit now
Investment real estate — not just offices
Podcast: What's next for the commercial real estate market?
After the recent issues at regional banks, commercial real estate has been in the spotlight. The headwinds have been well-publicized, but challenges create opportunities. Bert Crouch joins the Greater Possibilities podcast to discuss. May 12, 2023
The information on this site does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial advisor/financial consultant before making any investment decisions. Diversification does not guarantee a profit or eliminate a loss. The opinions expressed are those of the SMA team, are based on current market conditions, and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals. There is no guarantee these strategies will be able to meet their objectives. Past performance cannot guarantee future comparable results. An investment cannot be made directly into an index. These materials are provided by Invesco Managed Accounts (“IMA” or the “Firm”) for informational purposes only. All material presented is compiled from sources believed to be reliable and current, but accuracy cannot be guaranteed. This is being provided for informational purposes only, is not to be construed as an offer to buy or sell any financial instruments and should not be relied upon as the sole factor in any investment making decision. This should not be considered a recommendation to purchase any investment product. As with all investments, there are associated inherent risks. This does not constitute a recommendation of any investment strategy for a particular investor. Investors should consult a financial professional before making any investment decisions if they are uncertain whether an investment is suitable for them. Please read all financial material carefully before investing. For additional information about these strategies, contact Invesco. Past performance is not indicative of future results. Portfolio holdings and characteristics are subject to change. Invesco Managed Accounts LLC (IMA) is the investment adviser. Invesco Branded Index SMAs are sub-advised by Invesco Advisers, Inc. and Invesco Capital Management LLC. They provide investment advisory services to individual and institutional clients and do not sell securities. They are indirect, wholly owned subsidiaries of Invesco Ltd. Please consult the Firm’s Form ADV disclosure documents, the most recent versions of which are available on the SEC’s Investment Adviser Public Disclosure website at www.adviserinfo.sec.gov. for additional information. Investment strategies that seek to enhance after-tax performance may be unable to fully realize strategic gains or harvest losses due to various factors. Market conditions may limit the ability to generate tax losses or to generate dividend income taxed at favorable tax rates. A tax-managed strategy may cause a client portfolio to hold a security in order to achieve more favorable tax treatment or to sell a security in order to create tax losses. The ability to utilize various tax-management techniques may be curtailed or eliminated in the future by tax legislation, regulation, or guidance issued by the Internal Revenue Service. The benefit of tax-managed investing to an individual investor is dependent upon the tax liability of that investor. Over time, the ability of an investor in a tax-managed strategy to harvest losses may decrease and gains may build up in a securities portfolio. Invesco does not provide tax advice. The tax information contained herein is general and is not exhaustive by nature. It is not intended or written to be used, and it cannot be used by any taxpayer, for the purpose of avoiding tax penalties that may be imposed on the taxpayer under US federal tax laws. Federal and state tax laws are complex and constantly changing. Investors should always consult their own legal or tax advisor for information concerning their individual situation. Invesco is not affiliated with Citywire
1 Source: U.S. Managed Accounts 2023: Decisions About Discretion, Cerulli Associates. Overall growth of managed account programs to exceed 13% annually until 2026. Assets in separate accounts to grow by a projected 13.6% to 14.1% per year. 2 Source: Invesco, as of March 31, 2024 Not a Deposit | Not FDIC Insured | Not Guaranteed by the Bank | May Lose Value | Not Insured by any Federal Government Agency
Invesco QQQ™ Tax-Optimized SMA
The strategy is based on the Nasdaq-100® Index and seeks to deliver tax alpha using a highly systematic, quantitative research-driven investment process.
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Equity SMAs
Invesco S&P 500® Equal Weight Tax-Optimized SMA
The strategy is based on the S&P 500® Equal Weight Index and seeks to deliver tax alpha using a highly systematic, quantitative research-driven investment process.
Get your clients’ cash off the sidelines and back to work. With fixed income portfolios that cover the full spectrum of duration including long, intermediate, short, and enhanced cash – these SMAs can help you deliver the customized solutions and tax-efficient outcomes that clients expect.
Invesco Tax-Free Intermediate Term SMA
The strategy invests entirely in investment grade tax-exempt municipal bonds, targeting a weighted average portfolio duration of >5 years and no limitation on individual bond maturities.
Fixed Income SMAs
Invesco Tax-Aware Intermediate Term SMA
The strategy invests in a blend of investment grade tax-exempt and taxable municipal bonds, targeting a weighted average portfolio duration of >5 years with no limitation on individual bond maturities and exhibits extensive sensitivity to changes in interest rates.
Invesco Tax-Aware Enhanced Cash SMA
The strategy invests in a blend of investment grade tax-exempt and taxable municipal bonds, targeting a weighted average portfolio duration of 1.25 years with individual bond maturities of no greater than 3 years, with minimal sensitivity to changes in interest rates.
Featured strategies
We are continually developing new ways to help provide scalable customization and tax management for clients. Our two new equity SMAs combine our decades-long history in managing both index strategies and SMAs. Invesco QQQ™ Tax-Optimized SMA and Invesco S&P 500® Equal Weight Tax-Optimized SMA offer differentiated exposure to well-known indexes along with the personalized high-touch service you can expect from Custom SMAs by Invesco.
Our new equity SMAs are advised by the team behind two well-known Invesco exchange-traded funds. They bring tax management and personalization to US equity investing, as Josh Rogers, Lead Client Portfolio Manager for the custom tax-managed equity SMA platform, explains.
SMA access to well-known indexes
Take tax management to the
next
level
We are a team of portfolio managers, traders, analysts, and client service representatives who specialize in building customized, tax-smart portfolios – and providing a high-touch service at every step of the process.
High-touch service every step of the way
VIDEO
Whether you are looking to transition investors to separately managed accounts or want to know more about a portfolio decision, our experienced team of SMA specialists provides fast turnarounds and personalized support through every step of the process. Our team’s concierge service provides insights and assistance that empower you to spend more time having value-added conversations with clients about their objectives and market opportunities.
Personalized transition analysis
Determines the most efficient way to build SMAs around clients’ existing positions and goals
In-kind contributions
Limits the need to liquidate existing positions and recognizes capital gains during the transition process
Streamlined onboarding process
Simplifies client onboarding with the e-signing of documents and clear step-by-step instructions
Regular reporting
Ensures clients remain well-informed about market movements, trade rationales, and portfolio performance
5
Proactive content
Anticipates client concerns and provides deep insight powered by the research capabilities of a global investment leader
6
Fast response
Provides quick, clear answers to questions about the transition process or portfolio decisions
Add more value for clients – and spend more time with them
Make our high-touch service and experience your edge
$22.7B
26.9K
Experience as an established SMA provider with 15+ years experience in custom, tax-optimized investing
Unique separately managed accounts
SMA assets under management across all strategies
30+ years
Whether you’re looking for fixed income or equities, Custom SMAs by Invesco let you create customized, tax-efficient exposures for a variety of goals. By adding tilts and screens for ESG, impact, sectors, or other factors, you can build portfolios that express client convictions.
Partner with an expert in custom SMAs
Value for money
Technology is lowering SMA fees and increasing visibility. Investors can access portfolio information and trade rationale online, making portfolios easier to understand, manage and monitor.
Tax optimization
Through SMAs, you can optimize taxes, not just manage them. Techniques such as tax-loss harvesting, deferring gains, and limiting short-term gains and non-qualified dividends help to maximize after-tax returns.
Customized solutions
Because SMAs directly own the underlying investments, they can provide a framework for clients to customize portfolios based on their unique needs.
SMAs empower advisors to deliver the tailored solutions and tax-optimized portfolios that clients expect.
Bring the benefits of SMAs to clients
Limited
Periodic
Low
Premium
Generic
Paper- intensive
Extensive
Continuous
High
Competitive
Precise
E-sign
Tax management
Visibility
Fees
Asset allocation
Account set-up
Personalization
Then
Now
Details
How SMAs have evolved
Sophisticated techniques and software make it possible to continuously monitor portfolios for opportunities to generate meaningful tax-alpha.
New screening tools give advisors and their clients the ability to customize portfolios to express unique objectives and personal values.
Advisors and their clients have 24/7 online access to their portfolios and receive quarterly reports with detailed investment characteristics and performance.
Efficiencies from digitization and rising competition continue to drive SMA fees lower, making SMAs increasingly affordable for a wide range of clients.
A broader range on investments and better construction techniques mean advisors and their clients can build portfolios to exacting specifications.
Advisors and their clients can now create new SMAs and transfer accounts without printing and signing mountains of paperwork.
Separate accounts have been around for half a century. For most of their existence, SMAs were reserved for ultra-high-net-worth investors. Today, technology has significantly lowered the hurdles and upped the appeal of the structure, allowing financial professionals to deliver highly personalized, tax-smart portfolios that reflect the unique objectives and personal values of clients with more modest investable assets. New screening tools and increasingly sophisticated software have made it easier than ever for advisors to manage, monitor, and tax-optimize accounts, while efficiencies from digitization have made SMAs affordable for a wider range of clients.
The evolution of a go-to solution
Innovative products
Concierge service
Benefits
Evolution
Invesco Enhanced Tax-Optimized Large Cap Equity SMA
Provides investors with broad long/short exposure to large-cap US equities and seeks to deliver tax alpha using a highly systematic, quantitative research-driven investment process.
Separately Managed Accounts | Invesco US
1 Source: Changes in U.S. Family Finances from 2019 to 2022: Evidence from the Survey of Consumer Finances, Board of Governors of the Federal Reserve System, October 2023. 2 Source: 2020 Census, United States Consensus Bureau. 3 Source: Bloomberg L.P. 4 Source: Morningstar Direct, Bloomberg, Invesco analysis. Data from August 31, 1993 to December 31, 2023. 5 Source: Invesco as of 06/30/24. There is no guarantee objectives will be met.
In their search for investment avenues, investors have become clever with their capital, actively using options to generate an income. In doing so they’re harnessing the upside potential of equities in a way that gives them an element of downside protection, too.
Derivative income ETFs: Know what you own. With derivative income products, differences in the ETF structure, holdings, and trading can lead to meaningful variances in performance, yield consistency and tax treatment. It’s important to look under the hood and understand how these components might impact the fund. The Invesco Income Advantage strategy is designed to provide investors with a consistent stream of monthly income while maintaining exposure to equity markets. We accomplish this by combining two components that serve very distinct purposes: An equity portfolio and an options income strategy. So why options-based income? At a cost of reduced equity upside, options-based income strategies can diversify sources of income and aim to offer: • High and consistent yields without interest rate sensitivity • Equity market risk reduction
Seek consistent income with equity exposure
Why options-based income?
Investors need income. We have options. Our Income Advantage Suite is designed to provide total return through income today and potential long-term growth of capital tomorrow. In addition, QQA and RSPA are built on the foundation of our flagship ETFs, QQQ and RSP.
Invest in innovative companies
QQA delivers exposure to Nasdaq-100® companies at the forefront of transformative, long-term innovations such as augmented reality, cloud computing, big data, streaming services, electric vehicles, and more.
Built to provide consistent monthly income
QQA strives to provide a consistent yield from premiums collected from an option income overlay, dividends from stocks in the Nasdaq-100® Index, and interest income.
Seek consistent income
Like QQQ, QQA tracks the Nasdaq-100® Index, but it’s also designed to provide consistent monthly income and maintain growth potential – all with less volatility and downside risk mitigation.
QQA: Invesco QQQ Income Advantage ETF
Achieve equal exposure to all the market’s possibilities
RSPA invests a portion of the portfolio equally in all 500 stocks of the S&P 500 Equal Weight Index. This classic strategy for eliminating market concentration means you are never underexposed to the market’s possibilities.
RSPA strives to provide a consistent yield from premiums collected from an option income overlay, dividends from stocks in the S&P 500 Equal Weight Index, and interest income.
Manage concentration risk and generate income
Like RSP, RSPA tracks the S&P 500 Equal Weight Index, but it’s also designed to provide consistent monthly income and maintain growth potential – all with less volatility and downside risk mitigation.
RSPA: Invesco S&P 500 Equal Weight Income Advantage
Seek lower volatility
The option income overlay strategy aims to reduce market volatility and downside risk.
Gain exposure to international stocks
EFAA invests a portion of the portfolio in the MSCI EAFE Index, providing investors access to a diversified international equity portfolio.
EFAA strives to provide a consistent yield from premiums collected from an option income overlay, dividends from stocks in the MSCI EAFE Index, and interest income.
EFAA: Invesco MSCI EAFE Income Advantage ETF
Meet QQA, RSPA and EFAA: Our Income Advantage Suite
Make Invesco Income Advantage your advantage
The Invesco Income Advantage Suite provides exposure to well known indices with the manager objective of consistent income and downside mitigation.
Quick view: Invesco Income Advantage Suite
Products
Invesco QQQ Income Advantage ETF
Nasdaq-100 index combined with option income overlay for high income, downside protection, and upside participation
Nasdaq-100 Index + Cash + Diversified ELN
Product Detail
Holdings
Ticker: QQA
Invesco S&P 500 Equal Weight Income Advantage ETF
S&P 500 Equally Weighted index combined with option income overlay for high income, downside protection, and upside participation
S&P 500 Equally Weighted Index + Cash + Diversified ELNs
Ticker: RSPA
Invesco MSCI EAFE Income Advantage ETF
MSCI EAFE Index + Cash + Diversified ELNs
MSCI EAFE index combined with option income overlay for high income, downside protection, and upside participation
Ticker: EFAA
Invesco Income Advantage ETFs harness the expertise of two highly experienced teams, one that has proven options-based capabilities and another that has blazed a trail in the ETF market. The Global Asset Allocation team has more than 20 years of options portfolio management experience. Their approach to options-based income is rigorous and repeatable. Underpinning this is their industry-leading research platform that regularly models three billion data points for options on indices, ETFs and futures—additionally, the team is supported by institutional-quality trading and operational infrastructure.
Derivative income expertise meets ETF excellence
Invesco’s Global Asset Allocation team⁵
9
investment professionals
experience of options portfolio management
20+ years
Active investment management across multiple assets
Expertise
Asset under management including $5.2bn in options strategies
$18.1bn
What sets the Invesco Income Advantage strategy and our approach to options-based income apart? John Burrello, a Senior Portfolio Manager on the Invesco Global Asset Allocation team, outlines the strengths of the strategy and the potential pitfalls the team expertly avoids.
Portfolio Manager insight
Options can help investors affect investment outcomes across asset classes. Invesco’s options-based investment philosophy is grounded in risk management, systematic research and outcome reliability.
Partner with an expert in options-based income
Invesco Income Advantage Suite provides investors exposure to the potential growth of equities, while targeting income, less volatility, and downside risk protection. This is achieved through replication of the index combined with an active option overlay.
Options overlay
Conservative, diversified approach to monthly option Income is focused on consistent yield and capital growth
S&P 500 Equal Weight replication
MSCI EAFE replication
Equity component
NASDAQ-100 replication
Passive equity, manager seeks yield and risk targets with systematic active option overlay
Access the benefits of equities, income, risk mitigation
Rene Reyna, Head of Thematic & Specialty Product Strategy
Invesco has a long and proud history of providing clients with innovative ETFs. As the world changes, so too do investors’ needs. Their increasingly diverse range of solutions aims to better serve clients and deliver the investment outcomes they seek. Rene Reyna, Head of Thematic & Specialty Product Strategy, outlines what’s driving the demand for derivative income ETFs and how investors may be implementing them into their portfolios.
Leaders in ETF
innovation
Book a meeting.
When you’re ready for a partner, not just a provider, let us connect you directly to our options income portfolio experts to learn more.
ETF Pioneers
Manager Approach
Innovative Products
Meet the team
Demand for Income
Portfolio Manager Insights
Assets in derivative income ETFs³
December 2019
$1.87bn
July 2024
$80.67bn
Increase
4,200%
Global picture⁴
of equity-linked notes issued in 2023
$400bn
of assets in options income funds in 2023
$200bn
Explosion in options
Characteristics
Options
Dividends
Bonds
Interest rate sensitivity
Low as option prices are also affected by volatility, strike, time value, etc.
Moderate in part due to valuation discount rate and exposure to sectors like utilities and telecom
High due to inverse correlation between bond prices and rates
Equity market participation
Moderate as uncapped participation is traded for income (e.g. strike exercise)
High as the distributions come directly from equity securities
None as debt securities
Type of equity market defense
Structural/Contractual
None
Correlation-based
Income source
Accepting less upside potential
Corporate cash flows
Issuer cash flows
Driver of yield levels
Market participation/implied volatility
Corporate management/stock price
Rates/credit risk
Yield derived from market uncertainty
Yield derived from economic cash flows, influenced by corporate boards and central banks
Products:
Seeks total return through current income and long-term growth of capital
Derivative income ETFs
Actively managed ETF
Morningstar category:
Style:
Investment objective:
Nasdaq-100® Index combined with option income overlay for high income, downside protection, and upside participation
Nasdaq-100® Index + Cash + Diversified ELN
S&P 500 Equal Weight Index combined with option income overlay for high income, downside protection, and upside participation
S&P 500 Equal Weight Index + Cash + Diversified ELNs
MSCI EAFE Index combined with option income overlay for high income, downside protection, and upside participation
advantage
Component
No bonds or interest rate risk
Duration = 0
Attractive complement to fixed income and dividend focused income strategies
•
Structural downside risk mitigation
Manager seeks <80% of market downside
Manager seeks less volatility than the index Up/down profile can improve as markets become volatile
• •
Income
Seeks consistent high income
Aims to provide a high level of income and maintain growth potential Income from an options income strategy that pays a coupon like a bond and a return tied to the performance of an underlying equity investment Aims for consistent monthly income regardless of market volatility
• • •
Index exposure
Broad index exposure to: Nasdaq-100® Index S&P 500 Equal Weight Index MSCI EAFE Index
Passive equity exposure through index replication Systematic active index option income overlay designed for diversification and consistency
How is Invesco’s ETF team working to address client needs? As one of the world's largest ETF managers with $458 billion in assets, we’re always developing ways to tackle client challenges with creative solutions. Most recently, we’ve tapped into the vast expertise across Invesco, leveraging the Global Asset Allocation team. This partnership allows us to utilize the ETF vehicle to package and deliver very sophisticated active strategies. Derivative income ETFs have seen significant growth and demand over the last few years. Why is that? The rising interest in derivative income ETFs stems from their ability to provide income, market participation, and lower volatility, especially in uncertain economic environments. These ETFs appeal to investors looking to enhance yield and manage risk, making them a popular choice for both retail and institutional portfolios. However, the design details of option income strategies are important, offering investors the potential to achieve a more consistent income stream while benefiting from a balanced and diversified equity exposure. How are clients thinking about integrating derivative income ETFs into their portfolios? Clients integrate derivative income ETFs in diverse ways: Enhancing yield in conservative portfolios, diversifying income in balanced portfolios, mitigating equity volatility, supplementing growth in aggressive portfolios, and generating cash flow to name a few. Our ETF's balanced and diversified approach meets these needs, offering consistent income while maintaining key attributes like market participation and protection, making it a versatile addition across different portfolio objectives. What has been the reaction from clients to derivative income ETFs, and what aspects are they most excited about? Clients are embracing derivative income ETFs for their potential to generate steady income and provide flexibility in various market conditions. They value the ability to enhance yield, gain downside protection, and diversify income sources. Our strategy's balance of consistent income, market participation, and risk mitigation has been particularly well-received, offering a reliable and versatile option to meet diverse investment goals and portfolio needs.
Explore how our ETFs can be cost-effective tools for building strong, tax-efficient portfolios that help invest in new possibilities for portfolios.
ETF Strategies
capabilities
ETF Insights
Access our latest insights on investment opportunities and ways to use ETFs in portfolios.
What are options, and how do they generate income?
Options give an investor the right to buy or sell an investment at a fixed price by a certain date. Learn how options work and their potential benefits.
Never before has there been such demand for income
As people become wealthier, live longer and spend more time in retirement, investors are exploring all options for income generation and diversification.
Changes in US family finances (2019-2022)¹
Net worth for typical US household
$192,900
37%
15%
Median value of retirement accounts
$86,900
Almost five times faster than total population growth of about 200%
Growth of older population (1920-2020)²
People in 1920: 4.7% of the population
4.9M
1,000%
People in 2020: 16.8% of the population
55.8M
Not a Deposit | Not FDIC Insured | Not Guaranteed by the Bank May Lose Value | Not Insured by any Federal Government Agency About Risk There are risks involved with investing in ETFs, including possible loss of money. Index-based ETFs are not actively managed. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Both index-based and actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance. Ordinary brokerage commissions apply. The Fund's return may not match the return of the Index. The Funds are subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Funds. QQQ and RSP There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. The Fund's return may not match the return of the Underlying Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund. QQQ Investments focused in a particular sector, such as technology, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments. The NASDAQ Composite Index measures all NASDAQ domestic and international-based common stocks listed on The Nasdaq Stock Market. The Russell 3000® Index is an unmanaged considered representative of the U.S. stock market. The Russell 3000® Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. The sponsor of the Nasdaq-100 TrustSM, a unit investment trust, is Invesco Capital Management LLC (Invesco). NASDAQ, Nasdaq-100® Index, Nasdaq-100® Index Tracking Stock and QQQ are trade/service marks of The Nasdaq Stock Market, Inc. and have been licensed for use by Invesco, QQQ's sponsor. NASDAQ makes no representation regarding the advisability of investing in QQQ and makes no warranty and bears no liability with respect to QQQ, the Nasdaq-100® Index, its use or any data included therein. RSP Investments focused in a particular industry or sector, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments. Stocks of medium-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale. The Global Industry Classification Standard was developed by and is the exclusive property and a service mark of MSCI, Inc. and Standard & Poor's. "Standard & Poor’s," "S&P" and "S&P 500," are trademarks of Standard & Poor’s Financial Services, LLC and have been licensed for use by Invesco Capital Management LLC and its affiliates. Invesco S&P 500® Equal Weight ETF is not sponsored, endorsed, sold or promoted by Standard & Poor’s makes no representation regarding the advisability of investing in Invesco S&P 500® Equal Weight ETF. QQA, RSPA, and EFAA There are risks involved with investing in ETFs, including possible loss of money. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance. Ordinary brokerage commissions apply. The Fund’s return may not match the return of the Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund. Securities held by the Fund are subject to market fluctuations. You should anticipate that the value of the Shares will decline, more or less, in correlation with any decline in value of the securities in the Fund’s portfolio. Additionally, natural or environmental disasters, widespread disease or other public health issues, war, military conflicts, acts of terrorism, economic crises or other events could result in increased premiums or discounts to the Fund’s net asset value (“NAV”). The investment techniques and risk analysis used by the portfolio managers may not produce the desired results. While the Fund is actively managed, a substantial portion of the Fund’s portfolio is designed to track the performance of the Index. In managing this portion of the Fund’s portfolio, the portfolio managers will not generally buy or sell a security unless that security is added or removed, respectively, from the Index, regardless of the performance of that security. If a specific security is removed from the Index, the Fund may be forced to sell such security at an inopportune time or for a price lower than the security’s current market value. In general, equity values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic and political conditions. Investments in ELNs are susceptible to the risks of their underlying instruments, which could include management risk, market risk and, as applicable, foreign securities and currency risks. ELNs are also subject to certain debt securities risks, such as interest rate and credit risks. Should the prices of the underlying instruments move in an unexpected manner, the Fund may not achieve the anticipated benefits of an investment in an ELN, and may realize losses, which could be significant and could include the Fund’s entire principal investment. An ELN investment is also subject to counterparty risk, which is the risk that the issuer of the ELN will default or become bankrupt and the Fund may not be repaid the principal amount of, or income from, its investment. ELNs may also be less liquid than more traditional investments and the Fund may be unable to sell ELNs at a desirable time or price. In addition, the price of ELNs may not correlate with the underlying securities or a fixed income investment. Investments focused in a particular industry are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments. Derivatives may be more volatile and less liquid than traditional investments and are subject to market, interest rate, credit, leverage, counterparty and management risks. An investment in a derivative could lose more than the cash amount invested. Risks of futures contracts include: an imperfect correlation between the value of the futures contract and the underlying commodity; possible lack of a liquid secondary market; inability to close a futures contract when desired; losses due to unanticipated market movements; obligation for the Fund to make daily cash payments to maintain its required margin; failure to close a position may result in the Fund receiving an illiquid commodity; and unfavorable execution prices. A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns. Short sales may cause an investor to repurchase a security at a higher price, causing a loss. As there is no limit on how much the price of the security can increase, exposure to potential loss is unlimited. The Fund is non-diversified and may experience greater volatility than a more diversified investment. The value of an individual security or particular type of security may be more volatile than the market as a whole and may perform differently from the value of the market as a whole. The Fund currently intends to effect creations and redemptions principally for cash, rather than principally in-kind because of the nature of the Fund’s investments. As such, investments in the Fund may be less tax efficient than investments in ETFs that create and redeem in-kind. The Fund is subject to numerous market trading risks, including the potential lack of an active market, losses from trading in secondary markets, and disruption in the creation/redemption process. During stressed market conditions, Shares may become less liquid as result of deteriorating liquidity which could lead to differences in the market price and the underlying value of those Shares. QQA Investments focused in a particular sector, such as information technology, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments. RSPA Because the Fund may invest in other investment companies, it’s subject to the risks associated with the investment company and its investment performance may depend on the underlying investment company’s performance. The Fund will indirectly pay a proportional share of the investment company’s fees and expenses, while continuing to pay its own management fee to the Adviser, resulting in shareholders absorbing duplicate levels of fees. EFAA The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues. The performance of an investment concentrated in issuers of a certain region or country is expected to be closely tied to conditions within that region and to be more volatile than more geographically diversified investments. ADRs and GDRs may be subject to certain of the risks associated with direct investments in the securities of foreign companies. ADRs and GDRs may not track the price of the underlying securities on which they are based, and their value may change materially at times when U.S. markets are not open for trading. Currencies and futures generally are volatile and are not suitable for all investors. Because the Fund may invest in other investment companies, it’s subject to the risks associated with the investment company and its investment performance may depend on the underlying investment company’s performance. The Fund will indirectly pay a proportional share of the investment company’s fees and expenses, while continuing to pay its own management fee to the Adviser, resulting in shareholders absorbing duplicate levels of fees. Important information The information on this site does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial advisor/financial consultant before making any investment decisions. Shares are not individually redeemable and owners of the Shares may acquire those Shares from the Fund and tender those Shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 10,000, 20,000, 25,000, 50,000, 80,000, 100,000 or 150,000 Shares. Before investing, investors should carefully read the prospectus/summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the Fund call 800 983 0903 or visit invesco.com for the prospectus/summary prospectus. Citywire and Invesco are not affiliated.
Disclosures: There can be no assurance that any investment process or strategy will achieve its investment objective. Asset allocation and diversification does not guarantee a profit or eliminate the risk of loss. Past performance is not a guarantee of future performance. The information in this video does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial advisor/financial consultant before making any investment decisions. Please read all financial material carefully before investing. For additional information, contact Invesco. The opinions expressed are those of the speaker, are based on current market conditions, and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals. The Invesco Solutions team is a business unit of Invesco Advisers, Inc., a registered investment adviser that provides investment advisory services and does not sell securities. Invesco Advisers, Inc. is an indirect, wholly owned subsidiary of Invesco Ltd. Invesco Vision, designed by the Invesco Solutions team, is a decision support system that combines analytical and diagnostic capabilities to foster better portfolio management decision-making. By helping investors and researchers better understand portfolio risks and trade-offs, it helps to identify potential solutions best aligned with their specific preferences and objectives. The Invesco Vision tool can be used in practice to develop solutions across a range of challenges encountered in the marketplace. For additional information on our methodology, please contact Invesco. With respect to Invesco Advisers, Inc. (Invesco) model portfolios, Invesco intends to allocate a significant percentage of the portfolio to funds for which Invesco and/or its affiliates serve as investment manager (Invesco Affiliated Funds). Clients will indirectly bear fund expenses as shareholders for their account assets allocated to Invesco Affiliated Funds and funds for which Invesco and/or its affiliates do not receive compensation. For client account assets allocated to the Invesco Affiliated Funds, fees will be received by Invesco and/or its affiliates directly from the respective Invesco Affiliated Fund. These compensation arrangements create a conflict of interest relating to Invesco’s selection of funds (including from among the Invesco Affiliated Funds) for the strategy and the receipt of potentially higher compensation based on the selection. Invesco has an incentive to select Invesco Affiliated Funds for the strategy, including Invesco Affiliated Funds with higher expenses, over other funds (including other Invesco Affiliated Funds) with lower expenses because the fees that Invesco and/or its affiliates receive for client account assets in the Invesco Affiliated Funds are their compensation with respect to the strategy. This conflict of interest may result in a strategy that achieves a level of performance, or reflects higher fees, less favorable to the strategy than otherwise would be the case if Invesco did not allocate to an Invesco Affiliated Fund. Invesco does not offer tax advice. Investors should consult their own tax professionals for information regarding their own tax situations. Beta is a measure of risk representing how a security is expected to respond to general market movements. Smart beta represents an alternative and selection index-based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both in active or passive vehicles. Asset allocation and diversification do not guarantee a profit or eliminate the risk of loss. Invesco is not affiliated with Citywire.
1 Source: Broadridge Financial Solutions, 2024 2 Source: U.S. Asset Allocation Model Portfolios 2024, The Cerulli Report. 3 Invesco model portfolios are designed using the same capital market assumptions and portfolio construction techniques that we use for our most sophisticated institutional investors. 4 Source: Pensions & Investments, Largest Money Managers of 2023. 5 Source: Invesco, as of September 30, 2024. 6 Risk level: Each target-risk model series includes between four and 11 levels of risk and is tailored for a specific objective, from capital preservation and income to aggressive growth. 7 Source: RA Prince & Associates, Inc. as of March 31, 2020. The ranking of “largest” is based on number of full-time employees on the Invesco Global Consulting team.
Discover three key trends in model portfolios, which are particularly relevant in challenging times.
Three key trends in model portfolios
SOLUTIONS
Tactical Asset Allocation: monthly update
See what our macro regime framework is telling us – and what we’re doing in response – in our latest update.
ASSET ALLOCATION
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Client engagement programs
Through Invesco Global Consulting, the industry’s largest communication and consulting services group,⁷ we offer programs to help advisors with key aspects of their business.
Timely portfolio insights
We deliver regular and timely portfolio updates meant to facilitate portfolio conversations with clients.
Strategic market insights
We provide global macro thought leadership and asset class commentary that back our portfolio construction views.
Exclusive insights and resources to support advisor-to-client engagements
More than investments
Whether it be building a core portfolio for a targeted level of risk or complementing it with specific exposures, we offer a range of efficient, rigorously crafted solutions – both prebuilt and custom – for a multitude of objectives.
Tap into our expertise
Our array of prebuilt multi-manager portfolios can be implemented on a wide range of platforms, including turnkey asset management programs and home offices, as well as via subscription. We offer both target risk and completion portfolios consisting of mutual funds, ETFs, or a combination of both.
Prebuilt multi-manager portfolios
Through a full-service partnership, we deliver co-branded, custom model portfolios and maintain them with continual investment management, operations, and marketing support. These custom model portfolios can be advisor-traded or outsourced to third-party wealth technology platforms.
How do custom model portfolios work?
Laddered Bond ETF Models
Municipal and corporate Varying maturity bands solving for client income needs
Tactical US Equity Model
Dynamic factor rotation
Solve for home-country bias via active management
International Sleeve Models
Completion Models
Our completion models are designed to complement existing core portfolios by adding specific exposures, crafted for precise objectives.
ETF Only
• Multi-manager • Smart beta and pure beta • Taxable and tax-aware
Hybrid
Multi-manager Active, smart beta, and pure beta
Leading active mutual funds Passive mutual fund exposure
Mutual Fund Only
Explore our target risk portfolios
Explore our completion portfolios
Target Risk Models
Our target risk models provide broad diversification across asset classes and seek to outperform the benchmark while staying within the target risk level.⁶
Custom multi-manager portfolios
Portfolio construction
Build customized model portfolios using our disciplined investment process.
Successful launch
Ensure seamless launch through partnership with our investments, operations, and distribution along with development of impactful marketing materials.
Understanding needs
Compile portfolio guidelines, objectives, and preferred manager/funds based on unique needs of advisor teams and client base.
Ongoing partnership
Collaborate to drive sales and client engagement. Provide updates on model performance and timely insights to engage with clients.
Alessio de Longis, Head of Investments for Invesco Solutions, breaks down his team’s approach to asset allocation and fund selection for model portfolios as well as key differentiators resonating with clients.
Inside the investment process
Invesco Solutions’ model portfolios are underpinned by a disciplined, repeatable, and scalable investment process. By combining strategic and tactical asset allocation, and using a robust approach to manager selection, portfolio construction, and risk and performance monitoring, our team focuses on the key elements that drive investment alpha.
Discover Invesco’s approach to model portfolios
Strategic allocations predicated on longer-term views. Tactical asset allocation based on extensive macro regime analysis. Dynamic adjustments seeking to capture cyclical opportunities in the current environment while maintaining a risk-aware approach.
Evaluation using quantitative and qualitative metrics. Flexible architecture allowing for the inclusion of nonproprietary products.
Manager selection
Portfolios designed to incorporate client constraints and fee considerations. Portfolios optimized to solve for desired outcomes.
Comprehensive and continuous review of portfolios through Invesco Vision – our proprietary analytics platform that reveals key risk and return drivers for portfolio optimization. Independent risk oversight provided by our Global Performance Measurement and Risk team.
Risk and performance monitoring
Deliver alpha through a scalable and customizable process
Invesco’s model portfolios are professionally managed by Invesco Solutions, our independent multi-asset team. The team employs the same expertise with which it manages endowments, pensions, and other sophisticated mandates for global institutions to build cost-efficient portfolios using top-rated strategies from Invesco and leading third-party managers that are carefully vetted.
$99B⁵
in total assets
Invesco Solutions at a glance
70+
team members
22 years
of average experience
100+
advanced degrees and designations
19
global locations
Bringing our institutional pedigree to investors
for scalable growth
In partnering with Invesco, you can harness cost-effective model portfolio solutions for a range of specific outcomes. Our model portfolios are backed by the institutional caliber resources³ of one of the world’s largest asset management firms.⁴ We draw on our expertise across active, passive, and factor-based investing, as well as our diversified approach to portfolio construction to offer solutions that meet the objectives of any sized client or relationship.
A
partnership
Cost
Cost-efficient investment allocations, providing investors with potentially more value.
Balance
Diversification across multiple investment disciplines, managers, geographies, and styles, along with a consistent rebalancing process to achieve balanced portfolios for the long term.
Consistency
Consistent management, investment process, personnel, and philosophy with the aim of alleviating regulatory risk and delivering more consistent investment results across clients.
Benefits of model portfolios
A growing number of financial professionals are transitioning to what we call ‘The Model Practice’ with the goal of amplifying the performance of their portfolios, their teams, and their business. As a result, asset allocation model portfolio assets are projected to reach $2.9 trillion by 2026.²
Why transition to model portfolios?
Custom solutions
Prebuilt solutions
Investment process
Partnership
A partnership for scalable growth
