Invesco – ETF: the key to simplifying investment

By The partners of Challenges on 10. 00.2022 at 11 h 20 4 min read

A management company of American origin, Invesco is present in all countries and in all investment sectors.

Thibaud de Cherisey – Invesco

Especially recognized for its specialization in ETF development (Exchange Traded Funds) also known as publicly traded funds, Invesco currently manages (end of November 2021) 61 billion outstanding on these products in Europe and offers more than a hundred ETFs to meet the different exposure needs of investors.

Explanations with Thibaud de Cherisey, European Director of ETF marketing for Invesco

What is an ETF?

The ETF is a so-called passive investment tool, widely used by institutional investors, because it allows direct exposure to a diversified basket of equities, bonds or alternative asset classes. An ETF is built to replicate a benchmark, unlike classic active management, there is no human decision making, and therefore no human bias.

In addition, ETFs are easily accessible because they are treated like shares, note that their fees are also reduced compared to traditional active management and identical to the you are either an individual or a professional.

The choice of the ETF therefore lies in the choice of the index to which one wishes

Let us illustrate this with so-called thematic ETFs, which will replicate an equity index exposed to a particular theme: there is ETFs replicating an index made up of a basket of shares aligned with the Paris climate agreements and which therefore provides exposure to companies participating in the energy transition; an ETF linked to the blockchain business will follow companies that are part of this universe, an interest for investors, who see Blockchain as a theme of the future.

Investing responsibly with ETF-type products, is it possible ?

ETF providers like Invesco work with leading index providers, particularly on sustainability issues, related research on securities is done with companies specializing in these issues.

This consists, for example, of setting up company exclusion filters or reweighting the least responsible titles.

ETFs meeting ESG (environmental, social and governance) criteria can relate to broad indices such as the NASDAQ index 100 ESG, which allows support the most innovative companies while respecting ESG concerns. This means excluding companies that do not respect for example the 01 United Nations principles, those present in coal, in controversial weapons, etc.

Another example, an ETF which Following an index specializing in renewable energies, we are thus exposed to the evolution of the valuation of companies whose business is solar, wind power, biomass or the development of energy storage.

Another more specific index developed by a specialist company tracks stocks exposed only to solar energy. This is an energy that will grow enormously since, according to specialists, the installation costs should decrease further by 64% over the next 5 years. Companies that have invested in this area should therefore develop and see their assets increase.

According to experts, the trend is a very strong development on these renewable products, we are talking about a growth rate of more than 11%.

The technological theme is also experiencing significant growth

There are also technology exhibitions, for example with a technology-focused index in China, for those interested in the world’s second largest economy which has become a leader in innovation. The index selects the 100 the most important Chinese technology stocks.

These companies are active in the internet (blockchain, cyber security, fintech, robotics, etc.), new mobility (batteries, smart mobility, vehicle automation, etc.), health (medical robotics, telemedicine, medical tools and instruments, etc.) and industry (3D printing, innovative materials, space exploration, alternative energies, etc.)