Invesco Launches the Invesco MSCI North America Climate ETF (KLMN)

Rhea-AI Summary

Invesco (NYSE: IVZ) has launched the Invesco MSCI North America Climate ETF (KLMN) on the New York Stock Exchange with a record-breaking initial investment of US$2.4 billion from Finnish pension insurer Varma. This marks the largest funding for any new ETF launch globally.

The ETF tracks the MSCI Global Climate 500 North America Selection Index, which selects North American companies meeting specific environmental and climate criteria. The launch builds on the success of the global KLMT ETF launched earlier this year, providing institutional clients with a flexible way to target greenhouse gas and carbon emissions reduction themes. The US listed thematic ETF market currently represents over US$439 billion in assets under management.

Positive

• Record-breaking initial investment of US$2.4 billion, largest ever for a new ETF launch
• Expansion of thematic ETF portfolio in growing US$439 billion market segment
• Strategic partnership with major institutional investor (Varma) demonstrating product demand

Negative

• None.

Insights

Financial Analyst

The launch of KLMN with a $2.4 billion initial investment marks a significant milestone for Invesco, setting a global record for ETF launches. This substantial capital injection from Varma directly strengthens Invesco's ETF business and fee-generating assets. The timing is strategic, tapping into the growing $439 billion thematic ETF market. For Invesco's business model, this launch demonstrates their ability to attract major institutional clients and execute large-scale, customized solutions. The collaboration with MSCI enhances their competitive position in the climate-focused investment space, which continues to see increasing institutional demand. This development should positively impact Invesco's AUM and fee revenue streams.

Market Research Analyst

This record-breaking ETF launch signals a significant shift in institutional investment strategies, particularly in climate-focused products. The unprecedented $2.4 billion initial investment demonstrates strong institutional appetite for climate-themed investment vehicles. The ETF's focus on North American companies with specific environmental criteria aligns with growing ESG mandates among global institutional investors. This launch could catalyze similar large-scale climate-focused ETF deployments from other institutional investors. The collaboration between Invesco, MSCI and Varma sets a new benchmark for institutional-grade thematic ETF offerings and highlights the evolution of ESG investing from niche to mainstream.

KLMN breaks global record by launching with US$2.4 billion invested by Finnish pension insurer Varma

ATLANTA, Dec. 12, 2024 /PRNewswire/ -- Invesco Ltd. (NYSE: IVZ), a leading global asset management firm, announced the launch of the Invesco MSCI North America Climate ETF (KLMN). KLMN began trading on the New York Stock Exchange with US$2.4 billion in assets from Finnish pension insurer, Varma, which breaks a worldwide record by surpassing the funding of any previous new ETF launch globally.

"We are excited to collaborate once again with MSCI and Varma on a newly developed index and ETF that will allow Varma to easily execute a large allocation that aligns precisely with their investment views," says Brian Hartigan, Global Head of ETFs & Index Investments. "Invesco is in a rare position to service global, institutional clients who want to leverage the liquidity and efficiency of ETFs to target important allocations in their investment portfolios."

US listed thematic ETFs currently make up over US$439 billion in assets under management (AUM)¹ and the category continues to see growth both domestically and internationally. Themes like greenhouse gas and carbon emissions reductions that are targeted by KLMN's index can be useful to institutional clients who are looking to express large positions through a flexible and cost-effective allocation.

"I am grateful to work with MSCI, a leading global index provider, as well as Invesco, one of the world's largest asset managers, to break new ground on the launch of KLMN," says Timo Sallinen, Varma's Head of Listed Securities. "Our record-breaking $2.4 billion investment in the North American tilt of KLMN aligns with our investment in the global KLMT ETF, which launched earlier this year, to provide us with a flexible way to allocate to our precise geographical and responsible investing needs."

KLMN seeks to track the MSCI Global Climate 500 North America Selection Index, which is an index that selects North American companies from the MSCI ACWI Select Climate 500 Index, the parent index. The index is constructed by weighting the selected constituents in proportion of their weights in the parent index, with an aim to include companies that meet certain environmental and climate criteria relative to their peers. MSCI designed the index with input from Varma to align with Varma's investment parameters.

"We are pleased to collaborate with both Varma and Invesco to deliver an index for this ETF," said Christine Berg, Head of Americas Index at MSCI. "The launch truly demonstrates how custom indexes can be used to support the unique views of large institutional investors."

Varma's investment experience may not be representative of other customers' investment experience and is not a guarantee of future performance or success.

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. Our distinctive investment teams deliver a comprehensive range of active, passive and alternative investment capabilities. With offices in more than 20 countries, Invesco managed US$1.8 trillion in assets on behalf of clients worldwide as of September 30, 2024. For more information, visit www.invesco.com/corporate.

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

MSCI Global Climate 500 North America Selection Index selects constituents of the MSCI ACWI Select Climate 500 Index, which are also constituents of MSCI North America Index. The parent index is designed to support investors seeking to reduce their exposure to the greenhouse gas emissions and increase exposure to companies with their emission reduction targets approved by Science Based Targets initiative (SBTi) through an important optimization process.

¹ AUM of US Listed Thematic ETFs, Bloomberg, December 1, 2024

About Risk
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.

Unlike many investment companies, the Fund does not utilize an investing strategy that seeks returns in excess of its Underlying Index. Therefore, the Fund would not necessarily buy or sell a security unless that security is added or removed, respectively, from its Underlying Index, even if that security generally is underperforming.

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.

Stocks of companies with favorable Environmental, Social and Governance (ESG) attributes may underperform the market as a whole. As a result, the Fund may underperform other funds that do not screen companies based on ESG attributes. The criteria used to select companies for investment may result in the Fund investing in securities, industries or sectors that underperform the market as a whole or underperform other funds screened for ESG standards.

Investments focused in a particular industry are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.

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.

The Fund is non-diversified and may experience greater volatility than a more diversified investment. 

Invesco Ltd. is not affiliated with Varma or MSCI.

Before investing, investors should carefully read the prospectus and/or summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the fund(s), investors should ask their advisors for a prospectus/summary prospectus or visit invesco.com/fundprospectus.

Invesco Distributors, Inc.   
NA4069991 11/24  

NOT A DEPOSIT l  NOT FDIC INSURED  l  NOT GUARANTEED BY THE BANK  |  MAY LOSE VALUE  |  NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY

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

 

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SOURCE Invesco Ltd.

FAQ

What is the initial investment size in Invesco's new KLMN Climate ETF (IVZ)?

The Invesco MSCI North America Climate ETF (KLMN) launched with US$2.4 billion invested by Finnish pension insurer Varma, setting a global record for initial ETF funding.

What index does the Invesco KLMN ETF (IVZ) track?

KLMN tracks the MSCI Global Climate 500 North America Selection Index, which selects North American companies from the MSCI ACWI Select Climate 500 Index based on environmental and climate criteria.

How large is the US thematic ETF market where Invesco's KLMN (IVZ) operates?

US listed thematic ETFs currently make up over US$439 billion in assets under management (AUM).

How does Invesco's KLMN ETF (IVZ) relate to the KLMT ETF?

KLMN is a North American-focused complement to the global KLMT ETF, which was launched earlier in the year, both serving Varma's geographical and responsible investing needs.