ETF
Podcast: Deep dive into institutional ETFs
Invesco’s Emily McKinley delves into ETF mechanics, trends, and opportunities for insurers.
January 2, 2024
capabilities
ETFs for institutions
Explore the breadth of our ETF capabilities and our expansive platform with experts dedicated to supporting your investment goals.
$450B+ US ETF AUM¹
215+ US ETFs¹
45 US ETFs with AUM of $1B+¹
140+ ETF professionals globally¹
Capture the transformative potential of ETFs
Institutional adoption of ETFs has been growing and evolving. There are three key potential benefits driving this trend: access and liquidity, expanding use cases, and operational efficiency. Connect with our team to learn how to capture these benefits with our ETF strategies.
Access and liquidity
Institutions are looking for greater access and liquidity in markets that can be more difficult to invest in (e.g., exposure to the senior loan market can be attained using ETFs).
Expanding use cases
Institutions have been expanding their index strategies beyond traditional uses (e.g., ETFs can be used to gain precise factor exposure in a specific market).
Operational efficiency
ETFs can be efficient solutions helping enhance how institutions manage asset allocation (e.g., Treasury ETFs can be used for collateral management).
Reach investing goals with our ETF experts
We are one of the world's largest ETF managers with a dedicated team of ETF experts and specialists. We work closely with institutional clients on trading execution and reviewing relevant ETF strategies.
Explore our broad ETF lineup
Invesco has been pioneering new possibilities with ETFs for more than 20 years. Our suite of innovative ETFs spans equities, fixed income, alternatives, commodities, currencies, and more. We offer a diverse range of ETFs that can be highly relevant for institutions that expand beyond traditional use cases. Traditional use cases include index replication and cash equitization, while new ETF use cases include efficiency, access, tactical allocation, and factor implementation.
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Use case
Capability
Ticker
Fund name
Download Index replication
Consider an ETF to help track a specific index or market in a liquid, efficient way.
Invesco QQQ
Fact sheet Invesco NASDAQ 100 ETF
Fact sheet Factor implementation
Consider implementing factor styles on traditional market indexes with an ETF to help achieve specific outcomes.
Invesco S&P 500 Equal Weight ETF
Fact sheet SPHQ Invesco S&P 500® Quality ETF Fact sheet Invesco S&P 500 QVM Multi-factor ETF
Fact sheet Invesco Russell 1000 Dynamic Multifactor ETF
Fact sheet Cash equitization
Consider putting cash to work and potentially avoid cash drag by using a liquid ETF.
Invesco MSCI USA ETF
Fact sheet -
Use case
Capability
Ticker
Fund name
Download Access
Consider exposure to hard-to-reach markets with an ETF that contains relevant underlying holdings.
Invesco Senior Loan ETF
Fact sheet Invesco AAA CLO Floating Rate Note ETF
Fact sheet Consider interim exposure to the markets you want using an ETF while you research and source individual bonds.
Invesco BulletShares 2025 High Yield Corporate Bond ETF
Fact sheet Efficiency
Consider an ETF to reduce the time and costs of internal management associated with Treasury securities.
Invesco Short Term Treasury ETF
Fact sheet Tactical Diversify and seek potentially higher income opportunities relative to traditional fixed income investments. PGX Invesco Preferred ETF Fact sheet -
Use case
Capability
Ticker
Fund name
Download Tactical allocation
Consider an ETF to implement your tactical views in different asset classes and markets.
Invesco Optimum Yield Diversified Commodity Strategy No K-1 ETF
Fact sheet Invesco DB Base Metals Fund
Fact sheet -
Use case
Capability
Ticker
Fund name
Download Tactical allocation
Gain exposure to bitcoin in a secure and simple way. BTCO Invesco Galaxy Bitcoin ETF Fact sheet -
Use case
Capability
Ticker
Fund name
Download Tactical allocation
Consider long-term investment trends and potential growth drivers through an ETF.
Invesco Aerospace & Defense ETF
Fact sheet Invesco AI and Next Gen Software ETF
Fact sheet PHO Invesco Water Resources ETF Fact sheet SOXQ Invesco PHLX Semiconductor ETF Fact sheet TAN Invesco Solar ETF Fact sheet
We continue to innovate within our ETF lineup to provide relevant solutions for our institutional clients, ranging from core exposures and factors to alternatives and thematic strategies. Explore our full list of ETFs or contact our team to learn more.
Access more ETF data and insights
Submit a request form by clicking on one of the links below and an institutional ETF specialist will get in touch with you.
Frequently asked questions
Some of the most common institutional investor uses of ETFs include:
- Implementing long-term strategic and short-term tactical asset allocations.
- Getting exposure to specific sectors.
- Hedging against market drawdowns.
- Equitizing cash.
- Helping with manager transitions.
The ability to buy and sell ETFs during the day also makes them potentially attractive for liquidity management.
Some institutional investors use ETFs because they are flexible vehicles that cover a wide range of asset classes and market sectors. ETFs may also use passive index-based approaches, actively-managed strategies, and “smart beta”2 approaches that use factors such as value3 and momentum4. The asset classes that ETFs provide access to include US and international equities, dividend-paying stocks, sectors, corporate bonds, municipal debt, sovereign debt, digital assets, commodities, and currencies.
The potential benefits of using ETFs for institutional investors include:
- Potentially lowering overall fees.
- The ability to trade large positions during the day due to the potential liquidity of ETFs.
- Getting exposure to well-known market indexes.
- Potentially improving transparency because most ETFs disclose their holdings daily.
For institutional investors trading large amounts of shares, it’s crucial to consider the additional costs of owning an ETF beyond just its expense ratio. To calculate an ETF’s total cost of ownership, institutional investors may also want to research bid/ask spreads, premiums and discounts to net asset value (NAV), applicable commissions and brokerage fees, and index tracking error.
The Invesco ETF Capital Markets team can provide support with evaluating the costs of trading Invesco ETFs and can be contacted through the contact form on this page. It’s critical to consider the costs and benefits of ETFs alongside the total cost of ownership and benefits of other relevant institutional investment vehicles, such as collective trusts, segregated accounts, futures contracts, and swaps.
Many ETFs have robust liquidity on the secondary market, where shares of the funds are bought and sold on exchange. Beyond the secondary market, ETFs are created and redeemed “in-kind” — typically in large blocks of shares known as creation units — based on supply and demand by financial institutions and market makers called authorized participants (APs).
The Invesco ETF Capital Markets team can help evaluate the best way to execute large trades based on an institution’s requirements as well as provide support for creation and redemption mechanics, pre-trade analytics, and secondary market execution. The team can be contacted through the contact form on this page.
When institutional investors want to establish exposure to popular benchmarks like the Nasdaq-100 Index, they have several vehicles to choose from, including ETFs, options, and futures. Calculating the total cost of an investment’s ownership is critical for institutional investors because the difference in just a few basis points can be significant when investing very large amounts.
For example, institutional investors may start by comparing the bid/ask spreads of ETFs and futures contracts for the same index. One advantage of ETFs over index-based futures contracts is that investors don’t need to roll over expiring futures contracts to maintain their exposure like futures, which may result in additional costs. Also, for some indexes, an ETF may exist that tracks the benchmark, while a liquid futures market for that benchmark may not exist.
Featured insights
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ETF 
Footnotes
- 1
Bloomberg, L.P, and Invesco, as of 12/29/23
- 2
“Smart beta" is a ruled-based investment process that seeks to reduce portfolio risk, outperform a benchmark, or both.
- 3
"Value" applies to investments trading at discounts to similar securities, based on measures like book value, earnings or cash flow.
- 4
"Momentum" identifies investments with positive momentum (recent strong returns) or negative momentum (recent weak returns) to calibrate portfolio exposure to either.
Connect with our ETF specialists
Want to learn more? Submit a form to get in touch with one of our Institutional ETF specialists.
Request more ETF data and insights
Complete and submit this form to receive the requested fund information and/or commentary.
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Submit this form to receive information relevant to you.
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Important information
NA3298005
Since ordinary brokerage commissions apply for each ETF buy and sell transaction, frequent trading activity may increase the cost of ETFs.
Most ETFs disclose their portfolio holdings daily.
Important Information about DBB Fund
This Fund is not suitable for all investors due to the speculative nature of an investment based upon the Fund's trading which takes place in very volatile markets. Because an investment in futures contracts is volatile, such frequency in the movement in market prices of the underlying future contracts could cause large losses. See the Prospectus for risk disclosures.
Commodities and futures generally are volatile and are not suitable for all investors.
The value of the Shares of the Funds relate directly to the value of the futures contracts and other assets held by the Funds and any fluctuation in the value of these assets could adversely affect an investment in the Funds’ Shares.
Please review the prospectus for break-even figures for the Funds.
The Funds are speculative and involves a high degree of risk. An investor may lose all or substantially all of an investment in the Funds.
The Funds are not a mutual fund or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder.
This material must be accompanied or preceded by a DBB prospectus. Please read the prospectus carefully before investing.
BTCO Risks
See the prospectus for more information.
The Fund is speculative and involves a high degree of risk. An investor may lose all or substantially all of an investment in the Fund.
The Fund is not a mutual fund or any other type of Investment Company within the meaning of the Investment Company Act of 1940, as amended, and is not subject to regulation thereunder.
Shares in the Fund are not FDIC insured, may lose value and have no bank guarantee.
This material must be accompanied or preceded by a prospectus. Please read the prospectus carefully before investing.
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.
Bitcoin has historically exhibited high price volatility relative to more traditional asset classes, which may be due to speculation regarding potential future appreciation in value. The value of the Trust’s investments in bitcoin could decline rapidly, including to zero.
The further development and acceptance of the Bitcoin network, which is part of a new and rapidly changing industry, is subject to a variety of factors that are difficult to evaluate. The slowing, stopping or reversing of the development or acceptance of the network may adversely affect the price of bitcoin and therefore an investment in the Shares.
Currently, there is relatively limited use of bitcoin in the retail and commercial marketplace in comparison to relatively extensive use as a store of value, contributing to price volatility that could adversely affect an investment in the Shares.
Regulatory changes or actions may alter the nature of an investment in bitcoin or restrict the use of bitcoin or the operations of the Bitcoin network or venues on which bitcoin trades. For example, it may become difficult or illegal to acquire, hold, sell or use bitcoin in one or more countries, which could adversely impact the price of bitcoin.
The Trust’s returns will not match the performance of bitcoin because the Trust incurs the Sponsor Fee and may incur other expenses.
The Market Price of shares may reflect a discount or premium to NAV.
The price of bitcoin may be impacted by the behaviour of a small number of influential individuals or companies.
Bitcoin faces scaling obstacles that can lead to high fees or slow transaction settlement times, and attempts to increase the volume of transactions may not be effective.
Miners could act in collusion to raise transaction fees, which may affect the usage of the Bitcoin network.
Competition from central bank digital currencies (“CDBCs”) and other digital assets could adversely affect the value of bitcoin and other digital assets.
Prices of bitcoin may be affected due to stablecoins, the activities of stablecoin users and their regulatory treatment.
The open-source structure of the Bitcoin network protocol means that certain core developers and other contributors may not be directly compensated for their contributions in maintaining and developing the Bitcoin network protocol. A failure to properly monitor and upgrade the Bitcoin network protocol could damage the network.
Lack of clarity in the corporate governance of bitcoin may lead to ineffective decision-making that slow development or prevents the Bitcoin network from overcoming important obstacles.
If the award of new bitcoin for solving blocks and transaction fees for recording transactions are not sufficiently high to incentivize miners, miners may reduce or cease processing power to solve blocks which could lead to confirmations on the Bitcoin blockchain being temporarily slowed. Significant delays in transaction confirmations could result in a loss of confidence in the Bitcoin network, which could adversely affect an investment in the Shares.
A temporary or permanent “fork” in the blockchain network could adversely affect an investment in the Shares.
Flaws in the source code of Bitcoin, or flaws in the underlying cryptography, could leave the Bitcoin network vulnerable to a multitude of attack vectors.
A disruption of the internet may affect the use of bitcoin and subsequently the value of the Shares.
Risks of over or under regulation in the digital asset ecosystem could stifle innovation, which could adversely impact the value of the Shares.
Shareholders do not have the protections associated with ownership of Shares in an investment company registered under the Investment Company Act of 1940 (the “1940 Act”) or the protections afforded by the Commodity Exchange Act (the “CEA”).
Future regulations may require the Trust and the Sponsor to become registered, which may cause the Trust to liquidate.
The tax treatment of bitcoin and other digital assets is uncertain and may be adverse, which could adversely affect the value of an investment in the Shares.
Intellectual property rights claims may adversely affect the operation of the Bitcoin network.
The venues through which bitcoin trades are relatively new and may be more exposed to operations problems or failure than trading venues for other assets.
Ownership of bitcoin is pseudonymous, and the supply of accessible bitcoin is unknown. Entities with substantial holdings in bitcoin may engage in large-scale sales or distributions, either on nonmarket terms or in the ordinary course, which could result in a reduction in in the price of bitcoin.
The Trust is subject to the risks due to its concentration in a single asset.
Bitcoin spot trading venues are not subject to the same regulatory oversight as traditional equity exchanges.
Bitcoin transactions are irrevocable and stolen or incorrectly transferred bitcoin may be irretrievable. As a result, any incorrectly executed bitcoin transactions could adversely affect an investment in the Trust.
