Event Voice: Invesco: Invesco Global Clean Energy UCITS ETF

clock • 8 min read
Event Voice: Invesco: Invesco Global Clean Energy UCITS ETF

Why did you launch the ETF and what were you trying to achieve for investors? How could it fit in investors' portfolios? 

We launched the Invesco Global Clean Energy UCITS ETF in March 2021 for investors who wanted more direct exposure to the transition to a low-carbon economy than they were likely to achieve with broad ESG funds. We also wanted to provide investors with an investment that offered more diversification - in terms of number of holdings and spread across small, mid and large caps - than competing funds currently available on the market, as well as access to the expertise of a specialist in the field of clean energy.  

Investors could use this thematic ETF in a core-satellite approach or for tactical allocation as they would use technology-focused funds. It could be more compelling for many investors to gain exposure across the entire clean energy space instead of investing in a specific area such as solar or wind.

The ETF is an Article 8 investment under SFDR.

Where are the opportunities for investors in gaining access to this theme? 

You can make a strong investment case for clean energy, now and for the longer term. Some countries are already investing heavily in solar, wind and other renewables to bolster their energy security and reduce carbon emissions, while others have similar plans for the coming years. The number of companies involved in this transition is greater than many people might think, and our ETF aims to gain exposure to the entire ecosystem but with a focus on pure plays rather than companies earning only a marginal amount from their clean energy business.

Companies in the ETF are assigned to one of seven sectors based on their primary business activity. The largest exposures within the index are currently: solar, energy storage, energy efficiency and wind, followed by energy conversion, biofuel/biomass and other renewables. The exposure to each sector could change over time as different technologies develop and become more or less relevant compared to alternatives. Wind and solar are currently leading the way, and in many parts of the world are now cheaper for utility-scale electricity generation than fossil fuels. Hydrogen will likely be important for industries that can't be electrified, and these technologies could be cost competitive in the coming years.      

How is the ETF constructed and reviewed? 

The fund aims to achieve its objective by buying and holding, as far as possible and practical, all the securities in the WilderHill New Energy Global Innovation Index in their respective weightings. The fund will aim to rebalance its holdings whenever the Reference Index is rebalanced. The ETF is passively managed.

The index is constructed by California-based WilderHill, a firm specialising in clean energy index solutions. The firm's co-founder, Dr Rob Wilder, has been involved with environmental activism and clean energy for 30 years, so he brings passion, conviction and a deep knowledge base to exploration and identification of the companies involved and emergence of different technologies. The firm's index advisory committee is comprised of prominent individuals from the worlds of climate science, technology, politics and communications.

Stocks in the investment universe are screened on size (market cap greater than $100m) and liquidity (30-day average daily trading volume greater than $1m). Companies breaching UN Global Compact Principles, having severe controversies or involved in harmful business practices are excluded from consideration. The investment advisory committee then identifies companies best positioned to drive decarbonisation based on fundamental analysis, e.g., revenue, earnings, assets; a requirement to have the primary part of the business activities focused on new energy innovation; and without exposure to coal or oil and only minimal exposure to natural gas.

Companies are weighted equally for diversification and to ensure every constituent can make a material impact. The index is reviewed and rebalanced quarterly.

What is your engagement with the companies in which you invest and how do you measure and report impact to clients?

We believe engagement is important for active and passive portfolios. We actively engage with companies we hold in our portfolios, with members of Invesco's global ESG team combining with our active managers to meet senior management of as many of the companies as possible. We also vote on relevant issues, with our passive funds aligning with the largest shareholder from our active managers. Where there is no active holding, we will vote according to Invesco's ESG guidance.

We publish the relevant ESG metrics of each ETF on the Invesco website. This transparency can help investors monitor and better understand the fund's ESG characteristics, including ESG Rating, ESG Quality Score, Carbon Intensity and percentage of potentially controversial business involvement (0% for this ETF). ESG data is sourced from MSCI ESG Research.

Our ESG team also publishes an in-depth stewardship report, detailing the firm's proxy voting and engagement results over the period.  

Investment risks

For complete information on risks, refer to the legal documents.

The value of investments, and any income from them, will fluctuate. This may partly be the result of changes in exchange rates. Investors may not get back the full amount invested.

As this fund invests primarily in small-sized companies, investors should be prepared to accept a higher degree of risk than for an ETF with a broader investment mandate.

The value of equities and equity-related securities can be affected by a number of factors including the activities and results of the issuer and general and regional economic and market conditions. This may result in fluctuations in the value of the Fund. Investments into the clean energy sector are considerably exposed to investment trends focused on environmental factors and may have sensitivities towards ESG related government regulations and tax implications.

Important information

This marketing communication is for discussion purposes only and is exclusively for use by Professional Clients in the UK. It is not intended for and should not be distributed to, or relied upon, by the public.

Data as at 30 September 2022, unless otherwise stated.

Where individuals or the business have expressed opinions, they are based on current market conditions, they may differ from those of other investment professionals and are subject to change without notice.

For more information on our funds and the relevant risks, please refer to the share class-specific Key Investor Information Documents (available in local language), the Annual or Interim Reports, the Prospectus, and constituent documents, available from www.invesco.eu. A summary of investor rights is available in English from www.invescomanagementcompany.ie. The management company may terminate marketing arrangements.

This is marketing material and not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

This document is marketing material and is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.

UCITS ETF's units / shares purchased on the secondary market cannot usually be sold directly back to UCITS ETF. Investors must buy and sell units / shares on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units / shares and may receive less than the current net asset value when selling them.

THE WILDERHILL NEW ENERGY GLOBAL INNOVATION INDEX IS SPONSORED BY WILDERHILL NEW ENERGY FINANCE, LLC (""WILDERHILL"") AND IS CALCULATED AND PUBLISHED BY SOLACTIVE AG. NEITHER INVESCO NOR THE INVESCO GLOBAL CLEAN ENERGY UCITS ETF, BASED ON THE WILDERHILL  NEW ENERGY GLOBAL INNOVATION INDEX ARE SPONSORED, ENDORSED, SOLD OR PROMOTED BY WILDERHILL OR SOLACTIVE AG, AND WILDERHILL AND SOLACTIVE AG MAKE NO REPRESENTATION REGARDING THE ADVISABILITY OF INVESTING IN THE PRODUCT.

THE FUND IS NOT SPONSORED, PROMOTED, SOLD OR SUPPORTED IN ANY OTHER MANNER BY SOLACTIVE AG NOR DOES SOLACTIVE AG OFFER ANY EXPRESS OR IMPLICIT GUARANTEE OR ASSURANCE EITHER WITH REGARD TO THE RESULTS OF USING THE INDEX AND/OR INDEX TRADE MARK OR THE INDEX PRICE AT ANY TIME OR IN ANY OTHER RESPECT. THE INDEX IS CALCULATED AND PUBLISHED BY SOLACTIVE AG. SOLACTIVE AG USES ITS BEST EFFORTS TO ENSURE THAT THE INDEX IS CALCULATED CORRECTLY. IRRESPECTIVE OF ITS OBLIGATIONS TOWARDS THE ISSUER, SOLACTIVE AG HAS NO OBLIGATION TO POINT OUT ERRORS IN THE INDEX TO THIRD PARTIES INCLUDING BUT NOT LIMITED TO INVESTORS AND/OR FINANCIAL INTERMEDIARIES OF THE FINANCIAL INSTRUMENT. NEITHER PUBLICATION OF THE INDEX BY SOLACTIVE AG NOR THE LICENSING OF THE INDEX OR INDEX TRADE MARK FOR THE PURPOSE OF USE IN CONNECTION WITH THE FINANCIAL INSTRUMENT CONSTITUTES A RECOMMENDATION BY SOLACTIVE AG TO INVEST CAPITAL IN SAID FINANCIAL INSTRUMENT NOR DOES IT IN ANY WAY REPRESENT AN ASSURANCE OR OPINION OF SOLACTIVE AG WITH REGARD TO ANY INVESTMENT IN THIS FUND.

This document should not be considered financial advice. Persons interested in acquiring the fund should inform themselves as to (i) the legal requirements in the countries of their nationality, residence, ordinary residence or domicile; (ii) any foreign exchange controls and (iii) any relevant tax consequences.

For the full objectives and investment policy please consult the current prospectus.

This document has been communicated by Invesco Investment Management Limited, Ground Floor, 2 Cumberland Place, Fenian Street, Dublin 2, Ireland.

RO 2528317/2022

More on Economics

Consumer confidence dips for first time in three months

Consumer confidence dips for first time in three months

Higher than a year ago

Cristian Angeloni
clock 23 February 2024 • 2 min read
Fiscal rules 'close to meaningless' unless sensitivity to OBR forecasts is reduced

Fiscal rules 'close to meaningless' unless sensitivity to OBR forecasts is reduced

Trio of economists tell Treasury Committee

Cristian Angeloni
clock 22 February 2024 • 5 min read
Fed officials 'highly attentive' to inflation despite recent progress

Fed officials 'highly attentive' to inflation despite recent progress

Outlook is 'uncertain'

clock 22 February 2024 • 1 min read
Trustpilot