Invesco ETFs

An exchange-traded fund, or ETF, is like a mutual fund in the sense that it’s composed of other investments, such as stocks and bonds. However, ETFs are different in that they’re traded on a stock exchange during trading hours through an advisor or trading platform. Typically, ETFs will track a particular index, sector, commodity, or other asset types, such as real estate or fixed income.

Whether you’re looking to invest in a particular sector, geography, or theme, ETFs can give you exposure to companies that align with your goals while taking a diversified approach. 

Both ETFs and mutual funds are pooled investment vehicles that give investors access to entire asset classes and sectors with professional management. However, unlike mutual funds, ETFs provide:

• Higher tax efficiency.²
  
  
• More portfolio transparency.⁴
  
  
• The ability to trade during the day.
  
  
• The use of limit and stop-loss orders.⁵

A CAD-hedged ETF is an ETF designed to “hedge” foreign currency exposure. This structure can reduce the risk of owning foreign currency-denominated securities by locking in forward foreign exchange contracts, enabling the ETF to set an exchange rate for a certain period. Due to this structure, these ETFs have a higher cost than a non-currency-hedged strategy. This type of ETF could be suitable for investors looking to potentially reduce currency risk in their portfolio. 

Yes, some ETF’s offer dividends. Dividends are a form of income that stocks and ETFs may pay to shareholders and are considered income return. Some investors find high dividends attractive as it may add to their portfolio’s return potential.

Common stocks or ETFs do not assure dividend payments and the amount of a dividend if any, may vary over time. There can be no guarantee or assurance that companies will declare dividends in the future of that if declared, they will remain at current levels or increase over time.

There are a variety of ways to invest in ETFs, but how you do so really comes down to preference. Here are some tips to get started:

• First, define your financial goals — everyone is unique. Research and identify the ETFs that fit within your plan; our product center can help you navigate our diverse ETF lineup.
• ETFs listed on exchanges can be bought and sold through almost any financial institution or brokerage firm. Some offer commission-free ETF trades, and investors can typically buy as little as one share of an ETF. 
• Investing on your own? You can find Invesco ETFs on your trading platform of choice, or consult your financial professional.
     o An investor looking to take a hands-on approach may use online brokers, whereas a hands-off investor may seek a financial advisor. 

ETFs generally offer lower management fees than mutual funds.  In addition to management fees, there are operating fees that can be associated. These costs associated with trading ETFs are called the management expense ratio (MER).

An MER is calculated by starting with the product management fee + operating expenses + taxes:

• Management fee — the annual fee charged to manage the portfolio
• Operating expenses — any additional fees or expenses incurred to run the portfolio