ETF insights and resources

One of the investment themes we are most excited about this year is the Energy Transition. Advances in technology are enhancing the efficiency and cost-effectiveness of renewable energy sources like solar. And we believe clean energy is an increasingly attractive investment opportunity.

So, what’s the best way to gain exposure to the Energy Transition? The answer to that question will vary from investor to investor. Invesco has multiple thematic ETFs that can provide exposure, such as Invesco’s Global Clean Energy ETF (ticker PBD).

One interesting trend to note has been the representation of small-cap companies within this space. As of Feb. 29, 2024, the Invesco Solar ETF (ticker TAN) had 25% small-cap exposure while the Invesco WilderHill Clean Energy ETF (ticker PBW) had 56% small-cap exposure. After analyzing the clean energy ETF universe, it appears small-cap exposure is ranging broadly from 8% to 56% on average.

Technical analysis may be a useful tool for investors looking to add small-cap exposure to their portfolios. The Invesco Dorsey Wright SmallCap Momentum ETF (ticker DWAS) is based on an index designed to identify companies that demonstrate powerful relative strength characteristics based on that company’s market performance.

The momentum factor within DWAS is agnostic to the market environment, allowing the ETF to be offensive or defensive with its holdings. It provides a rules-based approach that provides exposure to current trends in market sentiment. Investors looking to add small-cap exposure to their portfolios — including small companies helping to power the Energy Transition — can find out more by exploring our online ETF resources.

To access our latest thinking on the trends shaping thematic ETF investing, we invite you to explore our ETF Insights Center.

Before investing, investors should carefully read the prospectus/summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the Fund call 800-983-0903 or visit invesco.com for the prospectus/summary prospectus.

Important information

Not a Deposit    Not FDIC Insured    Not Guaranteed by the Bank    May Lose Value    Not Insured by any Federal Government Agency

All data sourced from Bloomberg LP as of Feb. 29, 2024, unless otherwise noted.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

The opinions expressed are those of Invesco, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.

There are risks involved with investing in ETFs, including possible loss of money. Index-based ETFs are not actively managed. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Both index-based and actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance. Ordinary brokerage commissions apply. The Fund's return may not match the return of the Index. The Funds are subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Funds.

PBD

The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.

Investments focused in a particular industry, such as clean energy, and sector, such as industrials and utilities, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.

Stocks of small and mid-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.

The performance of an investment concentrated in issuers of a certain region or country, such as China, is expected to be closely tied to conditions within that region and to be more volatile than more geographically diversified investments.

TAN

Investments focused in a particular industry, such as solar, and sector, such as information technology, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.

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

The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.

Stocks of small and mid-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 micro-cap companies tend to involve substantially greater risks of loss and price fluctuations than more established companies.

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.

Investing in securities of Chinese companies involves additional risks, including, but not limited to: the economy of China differs, often unfavorably, from the U.S. economy in such respects as structure, general development, government involvement, wealth distribution, rate of inflation, growth rate, allocation of resources and capital reinvestment, among others; the central government has historically exercised substantial control over virtually every sector of the Chinese economy through administrative regulation and/or state ownership; and actions of the Chinese central and local government authorities continue to have a substantial effect on economic conditions in China.

PBW

Investments focused in a particular industry, such as clean energy, or sector, such as industrials, are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.

Stocks of small and mid-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.

The Fund relies on the Index Provider to identify the securities to be included in the Index that provide exposure to the environmental themes of clean energy. Fund performance may suffer if such securities are not correctly identified, or securities included in the Index do not benefit from the development of such themes. Information used to evaluate thematic factors may not be readily available, complete or accurate, which could negatively impact the Index Provider’s ability to apply its standards when compiling the Index and may negatively impact the Fund’s performance. Performance may also be impacted by the inclusion of non-theme-relevant exposures in the Index.

DWAS

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

Stocks of small-capitalization companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale than large companies.

The Fund may engage in frequent trading of its portfolio securities in connection with the rebalancing or adjustment of the Underlying Index.

The Fund is subject to numerous market trading risks, including the potential lack of an active market, losses from trading in secondary markets, and disruption in the creation/redemption process. During stressed market conditions, Shares may become less liquid as result of deteriorating liquidity which could lead to differences in the market price and the underlying value of those Shares.

The Fund may become “non-diversified,” as defined under the Investment Company Act of 1940, as amended, solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Index. Shareholder approval will not be sought when the Fund crosses from diversified to non-diversified status under such circumstances.

Shares are not individually redeemable and owners of the Shares may acquire those Shares from the Fund and tender those Shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 10,000, 20,000, 25,000, 50,000, 75,000, 80,000, 100,000, or 150,000 Shares.

Invesco Distributors, Inc.          03/24                  NA3452884

The late investment strategist Scott Minerd used to say that conventional wisdom is the surest path to investment underperformance. One could argue this sentiment is similar to a few other adages often heard in investment circles. Sayings like “I’m a contrarian investor” or “bull markets tend to climb the wall of worry.” These adages suggest that financial markets often move in ways that frustrate group think or herd behavior. 

But exactly what conventional wisdom should investors seek to avoid? Merriam Webster defines conventional wisdom as a “generally accepted prediction about a particular matter.” So if investors should avoid “conventional wisdom” in the financial markets, they may want to consider avoiding investments that appear unanimously loved, or if possible wait until the unanimous consensus around a certain investment begins to fade. Historically nothing appears to be more consistently punished by the markets than unanimous forecasts. That is bull markets often end as euphoria sets in and bear markets often bottom amidst a consensus of negativity.

That brings us to the question, “are we seeing any pockets of unanimity in current market forecasts that are raising red flags?” Well, for the past two years, no consensus forecast has been more consistently wrong than the prediction the Federal Reserve would begin cutting interest rates in “the next 3 to 6 months.” 

Recently, as forecasters grow more optimistic on the U.S. economy, and certain inflation prints have started to create uncertainty around inflation’s near-term path, the unanimous expectation that the Fed will cut rates before June 2024 has abated. From the contrarian’s perspective, now that Fed rate cut timing appears highly uncertain, the market may have finally created some space for rate cuts to materialize in the next 6 months.

One of the best performing segments within fixed income over the past two years has been short-duration high-yield—which aligns nicely with the “higher for longer” interest rate environment associated with steady economic growth and persistent inflation. In this category, we believe it might make sense to favor exposures like senior secured loans or a short duration high yield portfolio with a defensive tilt.

One could also make the case for highlighting the opportunity in intermediate investment grade bonds, which could prove attractive if the Fed were to eventually push short term rates lower as the U.S. economy slows and credit risk rises later this year.

It is also worth highlighting the current opportunity for income in global high yield bonds. If the Fed were to cut rates this year, monetary easing in the U.S. has, historically, coincided with a softer U.S. dollar and corresponding strength in emerging market economies that benefit from the reduced burden of their dollar-denominated debts.

And separately, many developing economies are currently benefitting from increased capital investment and trade with the U.S. in connection with the growth in “friend-shoring” and the diversification of domestic supply chains. Debt issued by corporations outside the U.S. is offering both attractive yield and the potential for appreciation through narrowing credit spreads as their economies expand.

To learn more about the latest trends in fixed income ETF investing, continue exploring our ETF Insights Center.

Before investing, investors should carefully read the prospectus/summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the Fund call 800-983-0903 or visit invesco.com for the prospectus/summary prospectus.

Important information

Not a Deposit   Not FDIC Insured   Not Guaranteed by the Bank   May Lose Value   Not Insured by any Federal Government Agency

All data sourced is from Bloomberg LP as of January 31, 2024, unless otherwise noted. All returns are based on market price.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

The opinions expressed are those of Invesco, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.

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.

Fixed income investments are subject to credit risk of the issuer and the effects of changing interest rates. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. An issue may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer’s credit rating.

Shares are not individually redeemable and owners of the Shares may acquire those Shares from the Fund and tender those Shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 10,000, 20,000, 25,000, 50,000, 80,000, 100,000 or 150,000 Shares. 

Invesco Distributors, Inc.               02/24                     NA3385143

“When is the Federal Reserve going to start cutting interest rates, and by how much?”

Those are two of the most common questions investors seem to be asking about the current economy. The question that seems the most interesting to me is “how do commodities tend to behave during an easing cycle?”

We did some research into this question and found that in the past 5 Fed easing cycles since 1989, commodities had positive returns on average over those cycles within 9 months of the first rate cut. This information is based on the DBIQ Optimum Yield Diversified Commodity Index, which is the benchmark for some of our commodity strategies, including the Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF (ticker PDBC).

But the motivation for cutting rates mattered. There was one year in particular that got my attention — 1995. The Federal Reserve lowered interest rates 75 basis points between July 1995 and January 1996. But it wasn’t because of a looming recession or high unemployment, which are situations that are tough for commodities. Rather, those cuts were motivated by low GDP growth. And in that environment, commodities were up about 30% in the 9 months following the initial rate cut, as referenced by the same DBIQ index. We think 1995 is comparable to the situation we’re in today, where the Fed is trying to navigate a soft landing to avoid a recession.

If history is any guide, when the Fed eventually starts its next easing cycle, commodities could do well, particularly industrial metals and energy or commodities with cyclical demand. Historically, decreasing interest rates have usually stimulated economic growth. We think as people start paying lower interest rates, this could spur the kind of spending that can be good for industrial metals demand, like purchasing durable goods or starting construction projects. Better economic conditions also tend to increase demand for energy products like crude oil, gasoline, and diesel fuel.

Invesco’s commodity suite contains many ETFs that offer the potential to take advantage of an eventual easing cycle, such as PDBC, which covers all 3 sectors of commodities – energy, metals, and agriculture.

For investors seeking to target specific sectors like industrial metals, Invesco offers an ETF with copper, aluminum, and zinc exposure as well as another that includes nickel, copper, aluminum, iron ore, cobalt, and lithium exposure.

For energy specific sectors, Invesco offers ETFs with exposure to crude oil, refined products, and natural gas.

We invite you to explore our online resources for more information on Invesco’s full suite of commodities ETFs.

Before investing, investors should carefully read the prospectus/summary prospectus and carefully consider the investment objectives, risks, charges, and expenses. For this and more complete information about the Fund call 800-983-0903 or visit invesco.com for the prospectus/summary prospectus.

Important information

Not a Deposit    Not FDIC Insured    Not Guaranteed by the Bank    May Lose Value    Not Insured by any Federal Government Agency

All data sourced from Bloomberg LP as of Feb. 29, 2024.

A basis point is a unit that is equal to one one-hundredth of a percent.

The DBIQ Optimum Yield Diversified Commodity Index Excess Return^TM is a rules-based index composed of futures contracts on 14 of the most heavily traded and important physical commodities in the world.

DBIQ Optimum Yield Diversified Commodity Index Excess Return^TM, DBIQ Optimum Yield Diversified Commodity Index Total Return^TM, Deutsche Bank Liquid Commodity Index^TM and Deutsche Bank Liquid Commodity Index–Optimum Yield Diversified Excess Return^TM (the "Indices") are products of Deutsche Bank AG and/or its affiliates. Information regarding these Indices is reprinted with permission. ©Copyright 2020. All rights reserved. Deutsche Bank^® DB^TM, DBIQ^® Optimum Yield^TM, DBIQ Optimum Yield Diversified Commodity Index Excess Return^TM, DBIQ Optimum Yield Diversified Commodity Index Total Return^TM, Deutsche Bank Liquid Commodity Index^TM and Deutsche Bank Liquid Commodity Index–Optimum Yield Diversified Excess Return^TM are trademarks of Deutsche Bank AG. The Indices and trademarks have been licensed for use for certain purposes by Invesco Capital Management LLC, an affiliate of Invesco Distributors, Inc. The Fund is not sponsored, endorsed, sold or promoted by DB Parties or their third-party licensors and none of such parties makes any representation, express or implied, regarding the advisability of investing in the Fund, nor do such parties have any liability for errors, omissions, or interruptions in the Indices. As the Index Provider, Deutsche Bank AG is licensing certain trademarks, the underlying Index and trade names which are composed by Deutsche Bank AG without regard to Index, this product or any investor.

Past performance is not a guarantee of future results. An investment cannot be made into an index.

This does not constitute a recommendation of any investment strategy or product for a particular investor. Investors should consult a financial professional before making any investment decisions.

The opinions expressed are those of Invesco, are based on current market conditions and are subject to change without notice. These opinions may differ from those of other Invesco investment professionals.

There are risks involved with investing in ETFs, including possible loss of money. Index-based ETFs are not actively managed. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Both index-based and actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance. Ordinary brokerage commissions apply. The Fund's return may not match the return of the 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.

PDBC

The Fund is subject to management risk because it is an actively managed portfolio. The investment techniques and risk analysis used by the portfolio managers may not produce the desired results.

Risks of futures contracts include: an imperfect correlation between the value of the futures contract and the underlying commodity; possible lack of a liquid secondary market; inability to close a futures contract when desired; losses due to unanticipated market movements; obligation for the Fund to make daily cash payments to maintain its required margin; failure to close a position may result in the Fund receiving an illiquid commodity; and unfavorable execution prices.

In pursuing its investment strategy, particularly when "rolling" futures contracts, the Fund may engage in frequent trading of its portfolio securities, resulting in a high portfolio turnover rate.

Commodity-linked notes may involve substantial risks, including risk of loss of a significant portion of principal and risks resulting from lack of a secondary trading market, temporary price distortions, and counterparty risk.

Swaps are subject to leveraging, liquidity and counterparty risks, and therefore may be difficult to value. Adverse changes in the value or level of the swap can result in gains or losses that are substantially greater than invested, with the potential for unlimited loss.

Derivatives may be more volatile and less liquid than traditional investments and are subject to market, interest rate, credit, leverage, counterparty and management risks. An investment in a derivative could lose more than the cash amount invested.

To qualify as a regulated investment company (“RIC”), the Fund must meet a qualifying income test each taxable year. Failure to comply with the test would have significant negative tax consequences for shareholders. The Fund believes that income from futures should be treated as qualifying income for purposes of this test, thus qualifying the Fund as a RIC. If the IRS were to determine that the Fund’s income is derived from the futures did not constitute qualifying income, the Fund likely would be required to reduce its exposure to such investments in order to maintain its RIC status.

The Fund’s strategy of investing through its Subsidiary in derivatives and other financially linked instruments whose performance is expected to correspond to the commodity markets may cause the Fund to recognize more ordinary income. Particularly in periods of rising commodity values, the Fund may recognize higher-than-normal ordinary income. Investors should consult with their tax advisor and review all potential tax considerations when determining whether to invest.

Leverage created from borrowing or certain types of transactions or instruments may impair liquidity, cause positions to be liquidated at an unfavorable time, lose more than the amount invested, or increase volatility.

The Fund may hold illiquid securities that it may be unable to sell at the preferred time or price and could lose its entire investment in such securities.

The Fund currently intends to effect creations and redemptions principally for cash, rather than principally in-kind because of the nature of the Fund’s investments. As such, investments in the Fund may be less tax efficient than investments in ETFs that create and redeem in-kind.

Commodities may subject an investor to greater volatility than traditional securities such as stocks and bonds and can fluctuate significantly based on weather, political, tax, and other regulatory and market developments.

Commodities, currencies and futures generally are volatile and are not suitable for all investors.

Shares are not individually redeemable and owners of the Shares may acquire those Shares from the Fund and tender those Shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 10,000, 20,000, 25,000, 50,000, 75,000, 80,000, 100,000, or 150,000 Shares.

Invesco Distributors, Inc.          03/24                  NA3452890