A leading institutional consultant sought to enhance its active equity income model for wealth intermediaries, targeting a durable ~4% yield without sacrificing total return or concentrating in US income.
By allocating to the Invesco MSCI EAFE Income Advantage ETF (EFAA), the consultant introduced international equity income exposure and a differentiated options framework.
The allocation followed an extensive ETF due diligence review of the entire Income Advantage suite, after which all three strategies were approved firm-wide for use across applicable client mandates.
A large institutional investment consultant developed an in-house active equity income model targeting an absolute distribution yield of approximately 4%, with a dual focus on income and total return. The portfolio blended option-based income strategies with higher-beta equity exposures, which required a careful balance between yield generation and participation in equity market upside. As the model was built out, an 8% strategic allocation was made to Invesco's MSCI EAFE Income Advantage ETF (EFAA) to address a diversification gap and strengthen the model's dual income-and-total-return objective.
Constructing the equity income model meant navigating several structural challenges in the option income space:
To optimize potential success, the consultant was looking for products that would balance income generation with higher-beta return drivers.
EFAA may be of interest to investors looking to enhance their current income models. The fund can help portfolios:
The fund has continued to participate in equity market growth.
Source: Invesco. Data as of 7/31/26. Sources: Invesco, Bloomberg L.P. Invesco ETF inceptions: 07/17/24. Average distribution yield is based on average of annualized monthly distribution yields since inception. All periods greater than one year are annualized. Returns based on daily returns and risk, beta, and up/down capture based on monthly returns starting at 7/31/24. An investment cannot be made directly in an index. Past performance is not a guarantee of future results. See performance notes below.
Standardized performance: EFAA. Performance data quoted represents past performance. Past performance is not a guarantee of future results; current performance may be higher or lower than performance quoted. Investment returns and principal value will fluctuate and Shares, when redeemed, may be worth more or less than their original cost. See invesco.com to find the most recent month-end performance numbers. Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times. Fund performance reflects applicable fee waivers, absent which, performance data quoted would have been lower. Returns less than one year are cumulative. Please keep in mind that high, double-digit and/or triple-digit returns are highly unusual and cannot be sustained. Invesco EFAA total expense ratio is: 0.42%
EFAA was added as an 8% strategic allocation within the consultant’s equity income model to help differentiate the options framework, grow international equity exposure, and improve the risk/return balance.
The consultant conducted a formal due diligence review of the entire Invesco Income Advantage Suite (QQA, RSPA, EFAA). The process included both qualitative and quantitative evaluation of:
The quantitative analysis also focused on performance outcomes such as yield generation, volatility and drawdown characteristics, and consistency across varying market environments.
Following the review, all three Income Advantage strategies (QQA, RSPA, EFAA) received formal approval and were cleared for use across the firm for applicable client mandates — extending beyond the initial equity income model.
Within the equity income model, EFAA now contributes to a diversified income framework alongside dividend ETFs and higher-beta exposures, supporting the portfolio's objective of generating ~4% distribution yield while maintaining significant exposure to equity markets. More broadly, the outcome reflects institutional confidence in the design, repeatability, and durability of the Income Advantage approach.
Income advantage ETFs can also be used by institutional clients:
Covered calls allos outcomes to flucuate with market volatility
| Approach | Consistent | Fluctuates with volatility |
|---|---|---|
| Covered calls - most common | Call strikes | Income, participation, defense |
Covered calls with income target. Stabilizes income, but allows participation and defense to fluctuate
| Approach | Consistent | Fluctuates with volatility |
|---|---|---|
| Covered calls and cash secured puts with income target - Unique to Invesco Income Advanatge | Income | Income, participation, defense |
Covered calls & cash secured puts with income target. Balanced consistency across outcomes
| Approach | Consistent | Fluctuates with Volatility |
|---|---|---|
| Covered calls - most common | Income, Participation | Call strikes, put strikes |
Explore how our ETF capabilities can help enhance institutional portfolios and contact our team to learn how EFAA can support investor needs.
Important information
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Image: Victor Bordera
There are risks involved with investing in ETFs, including possible loss of money. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. 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.
Diversification does not guarantee a profit or eliminate the risk of loss.
A decision as to whether, when and how to use options involves the exercise of skill and judgment and even a well conceived option transaction may be unsuccessful because of market behavior or unexpected events. The prices of options can be highly volatile and the use of options can lower total returns.
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