Leverage our ETF factor insights

Chris Dahlin

Factor & Core Equity Strategist

Risks:

• Higher borrowing costs
• Lower economic growth
• Higher tariff-induced prices
• TCJA uncertainty

Three key factors are driving rising US market risk. First, monetary policy remains restrictive, with the Federal Reserve prioritizing price stability and managing inflation expectations despite signs of slowing economic growth. Second, geopolitical and economic tensions around trade policies are colliding with elevated large-cap equity valuations, contributing to market volatility. Third, there’s  uncertainty around the extension of the 2017 Tax Cuts and Jobs Act (TCJA), which is set to expire at year-end.

While consumers have remained relatively resilient, the risk of higher borrowing costs, lower economic growth, higher tariff-induced prices, and a potential tax hike if the TCJA isn’t extended may prove too much for the economy.

Fortunately, there’s  the potential for these risks to be resolved. The Fed may become more satisfied enough with price stability to begin lowering interest rates. The US may reach more favorable terms with its major trading partners. And the Republican-led White House and Congress may preserve and extend a majority of the TCJA provisions.

SPHQ - Invesco S&P 500 Quality ETF

SPLV - Invesco S&P 500 Low Volatility ETF 

With these seemingly bifurcated outcomes in mind, investors with different risk tolerances may want to target different factors along the risk spectrum. Two of the more defensive equity factors are quality and low volatility. SPHQ invests in the 100 securities in the S&P 500 Index with the highest quality scores, calculated based on return on equity, the accruals ratio, and the financial leverage ratio. SPLV invests in the 100 securities in the S&P 500 Index with the lowest realized volatility over the past 12 months. While both are generally considered defensive, they’ve  historically offered different levels of downside mitigation and upside participation. For more risk-averse investors, SPLV’s historical 59% down capture and 69% up capture may be appealing. For investors more optimistic and seeking more upside potential, SPHQ’s historical 93% down capture and 95% up capture may be more attractive.

Get more information on these ETFs below this video.

VOICE OVER FOR MULTIMEDIA TEAM

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 as of April 2025 unless otherwise stated.

Volatility refers to the degree of variation in the price of a security over a specific period. It is a statistical measure of the dispersion of returns for a given security or market index.

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.

SPHQ

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.

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

The Fund may become “non-diversified,” as defined in the Investment Company Act of 1940 (the “1940 Act”), solely as a result of a change in relative market capitalization or index weighting of one or more constituents of the Index. Should the Fund become “non-diversified,” it will no longer be required to meet certain diversification requirements under the 1940 Act and may invest a greater portion of its assets in securities of a small group of issuers or in any one individual issuer than can a diversified fund. Shareholder approval will not be sought when the Fund crosses from diversified to non-diversified status solely due to a change in relative market capitalization or index weighting of one or more constituents of the Index.

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

SPLV

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.

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

There is no assurance that the Fund will provide low volatility.

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.              4/25                  NA 4431049

Hello, my name is John Frank - ETF Specialist Team Lead here at Invesco.

Today, I’ll walk you through our monthly factor dashboard, developed by our factor experts, that can be used as a valuable resource when considering factor implementation both tactically and strategically within your portfolios.

Many investors who use this piece start with the Factor Snapshot to review factor performance on a monthly basis. We highlight performance of six rewarded factors: quality, dividend yield, value, size, low volatility, and momentum. This is helpful to understand the performance of individual factors on a monthly and annual basis and how it relates back to your current allocations.

Another useful section is the Regime signal update. Regime is something that we commonly discuss as it relates to our Dynamic Multifactor lineup to highlight the shift of factors based on current economic indicators. However, this information could also be useful to help manage single factor allocations in your portfolio.  The Regime signals will be updated monthly based on leading economic indicators and identify which factors have historically performed best in those economic environments.

Finally, jumping to the Factors by fund section which provides an overview of Invesco’s factor ETFs. On the left you will find the ETF ticker and name while on the right the current exposure to each factor. As you are implementing factors in a portfolio this can help you evaluate if you are currently overexposed to certain factors and what strategies could be a potentially useful complement to your current allocations.

Our factor dashboard is one example of the many resources we have available to provide timely factor updates and implementation ideas.