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Invesco has bolstered its range of thematic exchange traded funds with the launch of strategies focused on the trends of artificial intelligence, cyber security and defence.
The Invesco Artificial Intelligence Enablers, Cybersecurity and Defence Innovation Ucits ETFs follow benchmarks constructed by Kensho, a division of S&P Global Indices with expertise in the application of AI and other technologies.
To build the three global indices, Kensho uses natural language processing as an initial screen to identify companies with potential exposure to key concepts associated with each theme. Its analysts further assess each of the companies identified and assign theme exposures accordingly.
Eligible companies are divided into “core” and “non-core” companies, the former being those with a “significant portion of their business operations and/or revenues deriving from products and services aligned with the theme”, according to Invesco.
Companies in the latter category are those operating across the broader value chain of the theme, providing “vital inputs” but not focusing on delivering the end-products themselves.
Invesco said the AI enablers strategy would target companies that were focused on “developing and enabling” the technology, infrastructure, and services propelling the growth and functionality of AI.
Meanwhile the cyber security ETF would invest in companies that protect “enterprises and devices from unauthorised access via electronic means”.
The defence-focused fund would offer exposure to companies that were developing “sophisticated weapons, defensive systems and other solutions for securing borders”, the asset manager added.
The indices for the AI enablers and cyber security themes apply environmental, social and governance screens to remove companies that either are involved in certain controversial business activities, do not comply with the principles of the UN Global Compact or have ESG scores in the bottom 10 per cent of the S&P Global BMI Index.
Gary Buxton, head of ETFs for Europe, the Middle East and Africa, and the Asia-Pacific region at Invesco, said the fund group “chose to work with Kensho for their intelligent approach to applying AI but also their expertise in understanding these rapidly evolving new technologies”.
“Plus, their being part of the S&P Global Index group should provide investors with a higher degree of confidence in the administration.
“While the potential of AI has really captured people’s imagination, solutions for cyber security and defence are now gaining traction as threats emerge across the globe,” he added.
According to Chris Mellor, the group’s head of ETF equity product management for the Emea region, the trio of launches “stand apart on several key factors”.
Each ETF has an annual charge of 0.35 per cent.
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