The combination of an Average People Pillar rating and a Below Average Process Pillar rating limit  Invesco Real Assets ESG ETF to a Morningstar Medalist Rating of Neutral.  The portfolio maintains a sizable cost advantage over competitors, priced within the lowest fee quintile among peers.  

 The strategy receives a Below Average Process Pillar rating. Independent of the rating, analysis of the strategy's portfolio shows it has maintained a significant overweight position in yield exposure and an underweight in liquidity exposure compared with category peers. High yield exposure is attributed to holding more stocks with high dividend or buyback yields. And a low liquidity exposure is rooted in stocks with lower trading volumes, limiting managers' flexibility. The strategy’s management team earns an Average People Pillar rating. The strategy's parent organization earns the firm an Average Parent Pillar rating. People Pillar and Parent Pillar ratings for this strategy are indirectly assigned by a Morningstar analyst rather than algorithmically derived. Please see the notes following each pillar section for more details. The details of assigning methods can be found in each pillar section.

Analyst Rating

Equinix

Enbridge

American Tower

Cheniere Energy

Prologis

Targa Resources

Essential Utilities

Kinder Morgan

Physicians Realty

Williams

Morningstar's evaluation of this security's process aims to determine the likelihood that it will outperform its Morningstar Category benchmark on a risk-adjusted basis over the long term. Invesco Real Assets ESG ETF earns a Below Average Process Pillar rating. 

The process is strengthened by the size of its portfolio management team. With five portfolio managers at the helm, the fund is well-staffed. However, the rating is held back by the parent firm's five-year risk-adjusted success ratio of 42%. The measure indicates the percentage of a firm's funds that survived and outperformed their respective category's median Morningstar Risk-Adjusted Return for the period. The parent's relatively low success ratio suggests that the firm could do better across its fund lineup. The parent firm's five-year retention rate of 67% also weakens the process.

 This strategy prefers more value-oriented stocks compared with the average fund in its peer group, the Real Estate Morningstar Category. But in terms of size exposure, it does not have much of a bias and resembles the typical portfolio. Analyzing additional factors, this strategy has continually displayed high-yield exposure compared with Morningstar Category peers during recent years, holding more companies returning cash to shareholders via dividends or buybacks. Higher-yield stocks can provide dependable income, but also have their risks. Dividend payers may cut payouts, for instance, if their earnings fall. In recent months, the strategy was more exposed to the Yield factor compared with its Morningstar Category peers as well. This strategy also has held illiquid stocks, evidenced by holdings' lower trading volume in recent years over peers, resulting in high liquidity risk exposure. Less-liquid stocks might offer strong returns to compensate for their risks, but they can be harder and more expensive to trade in bear markets. Similarly, in recent months, the strategy also had less exposure to the Liquidity factor than peers. In addition, this strategy has exhibited a tilt toward higher-volatility stocks in these years, meaning companies that have a higher historical standard deviation of returns compared with peers. Such exposure tends to pay off when markets are hot and to be costly when they are not. In this month, the strategy also had more exposure to the Volatility factor over its peers. More information on a fund and its respective category's factor exposure can be found in the Factor Profile module within the Portfolio section. 

 The portfolio is overweight in energy and utilities relative to the category average by 27.4 and 8.6 percentage points, respectively. The sectors with low exposure compared to category peers are real estate and consumer cyclical, with real estate underweighting the average portfolio by 43.8 percentage points of assets and consumer cyclical similar to the average. The portfolio is composed of 50 holdings and is diversified among those holdings. In its most recent portfolio, 43.0% of the portfolio's assets were concentrated in the top 10 fund holdings, as opposed to the category average's 59.9%. And in closing, in terms of portfolio turnover, looking at year-over-year movements, 80% of the fund's holdings have changed, whether through increasing, decreasing, or changing a position.

Below Average

Process

Invesco Real Assets ESG ETF earns an Average People Pillar rating. Ping-Ying Wang, the longest-tenured manager on the strategy, provides strong guidance, offering over 25 years of listed portfolio management experience. The strategies they currently manage have an average Morningstar Rating of 2.4 stars, demonstrating disappointing risk-adjusted performance compared with category peers. Ping-Ying Wang is supported by an experienced team, being able to draw on four additional listed managers, who average 17 years of listed portfolio management experience.  None of the portfolio managers here invest in this fund. This hurts the rating because manager investment would align their interests with the strategy's investors.

 Note: The People Pillar rating is indirectly assigned by an analyst. The longest-tenured manager of the fund also manages a different product rated by an analyst. Their analyst-assigned People Pillar rating is combined here with the People scores (algorithmic or analyst-assigned) for the fund’s other managers on a tenure-weighted basis.

Average

People

Invesco succeeds in a number of areas but also has its share of subpar offerings, along with many others that land somewhere in the middle. A mid-2023 change of CEO, from longtime chief Marty Flanagan to veteran Invesco executive Andrew Schlossberg, is noteworthy, and several other executives retired or departed in 2023. Portfolio-manager shuffles aimed at bolstering poor performers, which began under Flanagan, have continued under Schlossberg, who told Morningstar his most important aim is bolstering “investment quality.” However, major changes of direction or approach are unlikely. The firm retains a Morningstar Parent rating of Average. 
Invesco’s international-equity teams in Texas and New York remain solid. However, the extensive U.S.-equity lineup needs improvement. Fixed-income offerings run the gamut: The multisector and short-term-bond areas are good, but corporate high-yield is less impressive. The firm’s exchange-traded fund lineup includes the popular Nasdaq-focused QQQ; passive strategies make up around 37% of Invesco’s assets under management. Invesco has not been averse to trying new types of strategies, and it was among the firms that immediately launched a spot bitcoin ETF after SEC approval in early 2024.
The picture outside the United States is mixed. Fund performance has been subpar in Asia, and while the picture has brightened in the United Kingdom and Europe, that region still can’t be considered a strength.

Parent

Invesco Real Assets ESG ETF

IVRA is an actively managed, non-transparent fund of North American real assets companies screened for both environmental, social, and governance (ESG) and fundamental factors. The fund utilizes the Fidelity non-transparent model.

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iShares U.S. Real Estate ETF

Janus Henderson U.S. Real Estate ETF

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VanEck Mortgage REIT Income ETF

Direxion Daily Homebuilders & Supplies Bull 3X Shares

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US Diversified Real Estate ETF

Invesco Active US Real Estate

iShares Global REIT ETF

iShares Mortgage Real Estate ETF

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Invesco S&P 500 Equal Weight Real Estate ETF

SPDR Dow Jones REIT ETF

Schwab U.S. REIT ETF

Global X SuperDividend REIT ETF

Pacer Funds Trust-Pacer Benchmark Data & Infrastructure Real Estate Sector ETF

iShares Core U.S. REIT ETF

Vanguard Real Estate ETF

SPDR S&P Homebuilders ETF

Real Estate Select Sector SPDR Fund

Alpine Global Premier Properties Fund

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DoubleLine Commercial Real Estate ETF

First Trust Alerian Disruptive

iShares International Developed Real Estate ETF

CBRE Global Real Estate Income Fund

NETLease Corporate Real Estate ETF

ALPS Active REIT ETF

SPDR Dow Jones Global Real Estate ETF

SPDR Dow Jones International Real Estate ETF

Vanguard Global ex-U.S. Real Estate ETF

iShares International Developed Property ETF

The history of construction spending since 1993 reveals that this data tends to weaken prior to recessions. For a recent dip in Residential Construction attributed to the rise in mortgage rates, this indicator is charging higher.

Construction Spending Rises

Janus Henderson Mortgage-Backed Securities ETF

First Trust Low Duration Opportunities ETF

iShares MBS ETF

SPDR Portfolio Mortgage Backed Bond ETF

Vanguard Mortgage-Backed Securities ETF

Mortgage rates have not been this high since before the housing crisis. And while the housing market is slowing, prices are still high.

High Mortgage Rates And High Inflation

Aberdeen Standard Precious Metals Basket Trust

GLTR is an ETF that includes physical gold, silver, palladium, and platinum as part of its holdings, whereas IVRA provides exposure to real assets in North America using an ESG approach.

GLTR And IVRA: Portfolio Protection And Growth Using Precious Metals And Real Assets

Janus Detr Strt Shs Long-Term Care

Total housing starts rose to a 1.679 million annual rate in November from a 1.502 million pace in October, an 11.8 percent increase. Starts of multifamily structures with five or more units increased 12.1 percent to 491,000 and are up a robust 39.1 percent over the past year while starts for the two- to four-family-unit segment were up 50.0 percent at a 15,000-unit pace versus 10,000 in October.

Housing Construction Performed Well In November

iShares Global Green Bond ETF

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SPDR S&P 500 ESG ETF

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Momentum for the U.S. Responsible Investing industry picked up in January when President Joe Biden signed executive orders to re-enter into the Paris Climate Agreement. In 2021 through October month-end, there were 110 equity and fixed income funds that launched focused on Responsible Investing—71 RI-related ETFs and 39 RI-related mutual funds.

Responsible Investing Making Strides With U.S. Investors, Fund Companies, And Regulators In 2021

While most economic indicators deteriorated last year, house prices largely shrugged off the effects of the pandemic. Of the over 60 countries that enter into the IMF's Global House Price Index, three-quarters saw increases in house prices during 2020, and this trend has largely continued in countries with more recent data.

Housing Prices Continue To Soar In Many Countries Around The World

Brunswick

Cavco Industries

Camping World Hlds

Equity LifeStyle Properties

MarineMax

LCI Industries

Malibu Boats

MCBC Hlds

Patrick Industries

Despite reporting stellar results throughout the year, Manufactured Housing REITs' remarkable streak of eight straight years of outperformance over the REIT Index is suddenly in doubt entering the fourth quarter. Pressured by concerns over rising rates, inflation, and the broader rotation from growth into value, MH REITs have pulled back into "correction territory" for just the third time over the past decade.

Manufactured Housing: A Rare Opportunity

American Fin Tr Inc - Ordinary Shares - Class A

Blackstone Group

Blackstone Mortgage Trust

CyrusOne

CubeSmart

Cousins Properties

Digital Realty Trust

Healthpeak Properties Inc

Extra Space Storage

Farmland Partners

Hannon Armstrong Sustainable Infrastructure Capital

Highwoods Properties

Invesco Mortgage Capital

U.S. equity markets delivered their worst week since February - and worst month since the pandemic began - amid heightened concerns over potential stagflation, supply chain issues, and political dysfunction. Large-cap equities felt the brunt of the pressure this past week as S&P 500 slipped 2.2% while the tech-heavy Nasdaq dipped 3.6%. Mid-Caps declined 0.5% while Small Caps gained 0.9%.

September Slump, October Opportunity

iShares ESG USD Corporate Bond ETF

Given the magnitude of the changes we foresee, long-term investors may find opportunities in the technologies and innovations that create renewable energy sources or reduce the carbon intensity of energy production. Net zero is about reducing greenhouse gas emissions so that over time we can achieve an overall balance between emissions produced, and the emissions removed from the overall atmosphere.

Clean And Green Investing For A Low-Carbon Economy

Total AUM for ESG/SRI funds is roughly $537.1 billion - 75% represented by actively managed funds. Actively managed funds make up the majority of AUM for both the equity (68%) and fixed income (94%) universe.

ESG/SRI U.S. Funds Steadily Attract Inflows

Currently, there's no single standard for how ESG information should be analyzed and disclosed. Because of this, investors tend to rely heavily on generalized ESG “scores” provided by a handful of vendors. In order to gain a deeper understanding of ESG-related alpha drivers, investors are increasingly leveraging Big Data and Artificial Intelligence for ESG information collection and analysis. While ESG scores provide a static view, alternative data provides more dimensions of insight.

ESG X Big Data: Solving For The Double Bottom Line

From digital factories to plant-based clothing, climate change investing is much more than just investing in renewable energy, according to the Templeton Global Equity Group.

Climate Change Sectors Heat Up

In volatile markets, getting real asset exposure can smooth out the bumpy ride. ETF investors looking for uncorrelated assets can turn to the Invesco Real Assets ESG ETF (IVRA).

Get Real with Your Portfolio: IVRA's Take on Real Assets

Invesco US Large Cap Core ESG ETF

iShares Russell 1000 ETF

When Fidelity rolled out its first semi-transparent active equity ETFs in June 2020, it was far from certain these new types of ETFs would resonate with investors. With $350M in assets between FBCV, FBCG and FMIL just seven months in, Fidelity's Greg Friedman has termed the initial interest in Fidelity's semi-transparent active equity ETFs "better than anticipated".

With Fidelity At The Forefront, The Active Equity ETF Revolution Continues To Pick Up Steam (Podcast Transcript)

When Fidelity rolled out its first semi-transparent active equity ETFs in June 2020, it was far from certain these new types of ETFs would resonate with investors. With $350M in assets between FBCV, FBCG and FMIL just seven months in, Fidelity's Greg Friedman has termed the initial interest in Fidelity's semi-transparent active equity ETFs "better than anticipated"

With Fidelity At The Forefront, The Active Equity ETF Revolution Continues To Pick Up Steam (Podcast)

Invesco Focused Discovery Growth ETF

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Invesco made a splash in the active non-transparent ETF space today, launching four ETFs that will leverage the unique perspective and specialized expertise of Invesco's investment professionals in a structure that retains many of the characteristics that investors find attractive in an ETF structure, including an effective arbitrage mechanism, tax efficiency and intraday tradability.

Invesco Debuts 4 Active Non-Transparent ETFs

News for Invesco Real Assets ESG ETF ETF (IVRA)