Invesco's New ETF Wants To Save The Planet—Profitably

While the planet continues to sizzle, Invesco is counting on investors to stay cool — and keep their money in its latest climate-driven fund. On Wednesday, the asset manager rolled out the Invesco Global Equity Net Zero ETF (NYSE:IQSZ), an actively managed ETF designed to provide long-term return while helping create a net-zero carbon world.

Unlike passive ESG trackers that wrap their arms around an index and hope for the best, IQSZ gets its hands dirty. The fund invests globally in at least three countries, including emerging markets, and applies a proprietary evaluation to identify companies making significant strides toward achieving net-zero carbon emissions. That means both companies are already doing their climate math as well as those on a serious path to cleaner operations.

Moreover, Invesco also incorporates financial strength into the equation, screening for fundamentals such as value, momentum, and quality, while excluding typical ESG offenders, including tobacco and companies involved in the production of controversial weapons.

At a cost of only 0.19%, IQSZ is attractively priced for an active fund, which might resonate with investors wanting worldwide exposure with a clear conscience. And timing might be on Invesco’s side: sustainable investment and international diversification demand is gaining momentum even as broader ESG flows encounter a more questioning environment.

On that thought, also read: BlackRock and Goldman Sachs Shutter ESG And Other Thematic ETFs Amid Waning Demand

The IQSZ ETF leverages structures such as the Paris Aligned Investment Initiative (PAII), with the ultimate aim of helping the global transition to net-zero carbon emissions by 2050 or sooner. According to Invesco, large corporations are responsible for nearly 20% of the world’s carbon emissions, making corporate portfolios a strong lever for climate action.

The overall approach is to:

• Focus on 50% of the assets of the fund against Net Zero by 2027

• Pro-actively invest in high-emitting industries, if firms are showing credible transformation

• Reduce exposure to climate risk by avoiding companies set to falter during the net-zero shift

• Access global income sources by looking beyond regional biases

Invesco’s commitment extends beyond equity. The company oversees $5.3 billion of active global investment-grade assets. It applies the same net-zero principles to credit portfolios through macro overlays and derivatives as risk management and cost reduction tools.

The Bigger Picture

IQSZ enters an expanding universe of climate-themed funds, but with a twist: combining active stock selection with worldwide net-zero aspiration. With more than 230 ETFs and $700 billion AUM in the U.S. alone, Invesco undoubtedly has the scale and now another climate-themed product to compete in ESG waters.

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