Invesco Expands Active ETF Platform by Adding Innovative Option Strategy to Highest Demand Offerings

Rhea-AI Summary

Invesco (NYSE: IVZ) has expanded its active ETF platform by introducing an options income strategy to two of its high-demand offerings. The new Invesco Income Advantage Suite aims to add consistent yield to the Nasdaq 100 Index and S&P 500 Equal Weight Index. The actively managed Invesco QQQ Income Advantage ETF (QQA) and Invesco S&P 500 Equal Weight Income Advantage ETF (RSPA) combine equity exposure with a consistent monthly yield.

Key features of these ETFs include:

• Seasoned experts managing the option overlay
• Focus on attractive yields and long-term capital growth
• Potentially tax-advantaged monthly income
• No leverage
• Highly diversified options portfolio

Invesco will waive fees for QQA and RSPA until December 31, 2024, reducing the total expense ratio from 29 basis points to 0 basis points.

Positive

• Expansion of active ETF platform with new options income strategy
• Launch of Invesco Income Advantage Suite targeting high-demand indices
• Fee waiver for QQA and RSPA, reducing expense ratio to 0 basis points until December 31, 2024
• Potential for consistent and high monthly yield combined with equity exposure
• Experienced management team for option overlay and passive equity portfolios

Negative

• None.

Insights

Financial Analyst

The introduction of Invesco's Income Advantage Suite, QQA and RSPA, adds a dynamic twist to the existing ETF landscape. These ETFs aim to merge equity exposure from established indices, like the Nasdaq 100 and S&P 500 Equal Weight Index, with the potential for consistent monthly yields through an options income strategy. This blend offers a unique selling point for investors seeking both growth and steady income. The fee waiver until December 31, 2024, makes these ETFs even more attractive in the short term, potentially driving significant inflows. However, the sustainability of high yields in the long term will depend on the success of the options strategy and market conditions. This makes it essential for investors to monitor performance and volatility closely over time. The zero-fee structure could also pressure competing products, potentially igniting a pricing war, which might benefit investors with reduced costs.

Market Research Analyst

The launch of QQA and RSPA by Invesco taps into a growing demand for innovative, income-generating investment solutions that mitigate risks associated with market volatility. This product aligns well with current market trends where investors are looking for diversified solutions to navigate turbulent financial waters. Unique features like tax-advantaged monthly income, no leverage and a diversified options portfolio stand out in the competitive ETF market space. It’s also important to note Invesco's strong historical performance and industry experience in managing ETFs, which adds credibility and potential for investor confidence. The inclusion of these funds in Invesco’s broader suite of offerings further strengthens the firm's competitive edge. Investors should, however, remain cautious about the inherent risks of options-based strategies, which, although designed to provide stability, may carry complexities not immediately apparent.

Fee waiver brings QQA and RSPA management fee to zero

ATLANTA, July 17, 2024  /PRNewswire/ -- Invesco Ltd. (NYSE: IVZ), a leading global asset management firm, announced today that it will expand its active ETF platform by layering an options income strategy over two of its most well-known and high demand investment offerings. The launch of the Invesco Income Advantage Suite seeks to add consistent yield to the Nasdaq 100 Index and S&P 500 Equal Weight Index offering investors another way to access these two innovative strategies.

Actively managed Invesco QQQ Income Advantage ETF (QQA) and Invesco S&P 500 Equal Weight Income Advantage ETF (RSPA) aim to combine the equity exposure of an index-tracking product with a consistent and high monthly yield. QQA and RSPA are unique in their goals to offer reliable income and market participation, and a diversified option income overlay, allowing for a balance of yield and growth with a focus on long-tern total returns.

"Invesco has a broad and deep range of expertise across equities, fixed income, and alternative management. Today's launch is another example of how we can infuse our high-quality active management into a variety of vehicles to deliver strategies that meet our clients' needs," says Doug Sharp, Senior Managing Director, Head of the Americas and EMEA.

Invesco has been a pioneer in active ETFs for over 15 years, leveraging its active investment capabilities within the ETF wrapper. It is our belief that we have just entered the investor inflection point for active ETFs, and this offers a renewed opportunity for growth of our $25 billion AUM actively managed ETFs and "actively powered" index-tracking strategies.

"Income Advantage ETFs are designed for investors who want the same innovative exposure as QQQ and RSP with the addition of consistent income and risk mitigation, untethered to Fed action or interest rate oscillation," says John Burrello, Senior Portfolio Manager for the Income Advantage Suite. "Our existing experience as long-term stewards of consistent income and performance will be applied with our full focus in the new ETFs."

Design details matter in the growing and varied options-based income ETF category.  The ETFs in the Invesco Income Advantage suite will be the only ETFs that offer all the following attributes:

• Seasoned experts with proven systematic active experience in managing the option overlay, combined with the world's largest manager of NASDAQ-100 and S&P 500 Equal weight ETFs managing the passive equity portfolios.
• A product design created for attractive yields, long-term growth of investor capital, and less volatility than benchmark indices.
• A focus on distributing potentially tax-advantaged monthly income, not capital gains or return of capital.
• Consistency of yield and beta profile, without leverage.
• Highly diversified options portfolio, frequently laddered according to market conditions, and should continuously allow for more upside market participation than existing less diversified covered call ETFs.

Invesco designed QQA and RSPA to suit investors who want to participate meaningfully in core, trusted equity indices, but with less volatility and downside risk, while earning attractive and consistent monthly income.  Consistency of yield and market participation are both crucial elements for investors to trying to decide how the Income Advantage ETFs might fit into their portfolio.

"We see the intersection of Invesco's largest ETF franchise and income-oriented investments as a major area of investor demand and a primary focus for our US Wealth Management division over the next year. It reflects our commitment to delivering exceptional client service and successful financial outcomes" said John McDonough, Head of Americas Distribution. "Our dedicated and experienced distribution team is fully equipped to educate clients about our newly launched income strategies, ensuring they understand how it can help their income goals and objectives."

Invesco will waive fees of QQA and RSPA until December 31, 2024, effectively bringing the total expense ratio of each ETF from 29 basis point to 0 basis points with the discretion to extend the fee waiver further.  

QQA and RSPA will join the Invesco QQQ Innovation Suite and Invesco Equity Index Custom SMAs to offer optionality and variations of our existing product offerings to help investors reach their best possible investment outcomes.

To view the prospectus for Invesco QQQ Income Advantage ETF (QQA) and Invesco S&P 500 Equal Weight Income Advantage ETF (RSPA), please click on the links below:

-       Invesco QQQ Income Advantage ETF (QQA)
-       Invesco S&P 500 Equal Weight Income Advantage ETF (RSPA)

About Invesco Ltd.
Invesco Ltd. (Ticker NYSE: IVZ) is a global independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. With offices in more than 20 countries, our distinctive investment teams deliver a comprehensive range of active, passive and alternative investment capabilities. Invesco managed US $1.7 trillion in assets on behalf of clients worldwide as of March 31, 2024. For more information, visit www.invesco.com/corporate.

There are additional risks involved in writing (selling) covered call options. The Fund, by writing covered call options on the Index, will give up the opportunity to benefit from potential increases in value of the index stocks above the exercise prices of the options, but will continue to bear the risk of declines in the value of the Index. The Fund will be subject to capital gain taxes, ordinary income tax and other special tax considerations due to its writing covered call options strategy.

Shares are not individually redeemable and owners of the Shares may acquire those Shares from the Funds 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, 75,000, 80,000, 100,000, 150,000 or 200,000 Shares. 

Not a Deposit; Not FDIC Insured; Not Guaranteed by the Bank; May Lose Value; Not Insured by any Federal Government Agency

Invesco Distributors, Inc. is the U.S. distributor for Invesco Ltd.'s products and is a wholly owned, indirect subsidiary of Invesco Ltd.

NA 3707171            7/24

Contact: Stephanie Diiorio, stephanie.diiorio@invesco.com, 212.278.9037

 

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SOURCE Invesco Ltd.

FAQ

What new ETFs has Invesco (IVZ) launched in its Income Advantage Suite?

Invesco has launched two new ETFs: the Invesco QQQ Income Advantage ETF (QQA) and the Invesco S&P 500 Equal Weight Income Advantage ETF (RSPA). These ETFs combine equity exposure with an options income strategy.

What is the fee structure for Invesco's (IVZ) new Income Advantage ETFs?

Invesco is waiving fees for QQA and RSPA until December 31, 2024, effectively reducing the total expense ratio from 29 basis points to 0 basis points. The company has discretion to extend this fee waiver further.

How do Invesco's (IVZ) new Income Advantage ETFs differ from existing options-based income ETFs?

Invesco's Income Advantage ETFs offer a unique combination of features, including seasoned experts managing the option overlay, focus on attractive yields and long-term growth, potentially tax-advantaged monthly income, no leverage, and a highly diversified options portfolio.

What is the target market for Invesco's (IVZ) new Income Advantage ETFs?

The Income Advantage ETFs are designed for investors who want exposure to the Nasdaq 100 Index and S&P 500 Equal Weight Index with the addition of consistent income and risk mitigation, independent of Fed action or interest rate fluctuations.