Invesco is adding three new products to its range of thematic exchange-traded funds (ETFs), offering exposure to the “powerful long-term trends” of artificial intelligence (AI), cybersecurity and defence.
The Invesco Artificial Intelligence Enablers UCITS ETF will focus on companies that drive the technology, infrastructure and services behind the growth and functionality of AI.
Invesco Cybersecurity UCITS ETF will hold firms specialising in protecting business and devices from unauthorised access via electronic means.
Finally, Invesco Defence Innovation UCITS ETF will invest in companies working on advanced weaponry and defensive systems to secure national borders.
All three will have an annual charge of 0.35%.
The ETFs will track indices developed by Kensho, a division of S&P Global Indices, which uses artificial intelligence and other ‘next generation’ technologies in constructing thematic benchmarks.
Gary Buxton, head of EMEA and APAC ETFs at Invesco, said: “While the potential of AI has really captured people’s imagination, solutions for cybersecurity and defence are now gaining traction as threats emerge across the globe.
“For investors, the question is how best to capture these opportunities today and into the future. We chose to work with Kensho for their intelligent approach to applying AI but also their expertise in understanding these rapidly evolving new technologies.”
Kensho’s methodology for index construction begins with a global pool of stocks screened through natural language processing (NLP) to identify companies associated with each thematic concept. Analysts at Kensho then classify companies based on their relevance to each theme, sorting them into ‘core’ and ‘non-core’ categories.
Core companies generate a significant portion of revenue from theme-aligned products and services, while non-core companies contribute indirectly, supplying essential components or infrastructure but not delivering the end-products themselves.
An overweight factor is applied to core companies to enhance pure-play exposure to the theme. Both categories use equal weighting, subject to diversification and liquidity constraints.
The AI and Cybersecurity indices also apply environmental, social and governance (ESG) filters, excluding companies with low ESG scores, involvement in controversial activities or non-compliance with principles from the United Nations Global Compact.
These new funds expand Invesco’s thematic ETF range, which already includes portfolios focused on blockchain, biotechnology and clean energy stocks.