Invesco EUR Corporate Bond ESG Multi-Factor UCITS ETF

Investment rationale

This fund can serve as an actively managed euro corporate bond allocation for investors seeking total return from investment grade credit while promoting environmental or social characteristics under Article 8 SFDR. The fund has a risk indicator of 2 out of 7 and a recommended holding period of 5 years, indicating it is designed for long-term investors who accept that 100% of capital is at risk and there is no guarantee or protection. It is intended for investors aiming for long term capital growth who may not have specific financial expertise but can make an informed decision. Its distinct feature is the combination of ESG screening with a quantitative multi-factor process built around value, low volatility and carry in euro-denominated corporate bonds.

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How the strategy works

The fund’s objective is to seek total return by investing in an actively managed portfolio of corporate bonds that meet certain ESG criteria. It generally invests in fixed-rate, euro-denominated, unsecured corporate bonds from global issuers with an investment grade credit rating; as of 31 August 2026, the portfolio had a yield to maturity of 3.91%, yield to worst of 3.85% and effective duration of 4.32. The fund is not managed in reference to a benchmark, although it may use the Bloomberg Euro Corporate Bond Index for performance comparison and the Investment Manager considers the portfolio’s relative composition against the Bloomberg Euro Corporate Bond Index. The share class is unhedged, base and share class currency are EUR, the fund may use derivatives for risk management, cost reduction, additional capital or income generation and for investment purposes, may engage in securities lending, is accumulating, and has a recommended holding period of 5 years.

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Investment philosophy

• The investment universe is generally fixed-rate euro-denominated unsecured corporate bonds from global issuers with investment grade credit ratings, selected within an actively managed UCITS ETF structure.

• Security selection first applies the fund’s ESG policy, which includes exclusionary criteria based on controversial business activities or ESG controversies and a best-in-class approach that selects securities from each industry scoring highest under the Investment Manager’s scoring system.

• The remaining eligible securities are ranked using a quantitative model based on three major factors: value, low volatility and carry; separate portfolios are created for each factor and then combined so that each factor makes an equal risk contribution.

• As of 31 August 2026, the portfolio held 233 securities, with top positions including Allianz Finance II BV 3.25% 04/12/29 at 1.45%, ING Groep NV VAR 01/02/30 at 1.31% and Kerry Group Financial Services Unl 0.875% 01/12/31 at 1.24%; sector exposure was 50.3% financial institutions, 45.0% industrial and 4.8% utility.

• Portfolio characteristics at 31 August 2026 included geographic exposure led by France at 22.3%, the United States at 15.9% and Germany at 11.3%; credit quality of 7.36% AA, 48.65% A and 44.03% BBB; and maturity exposure concentrated in 5 to 10 years at 47.16%, with the portfolio rebalanced 1-2 times per month.

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Distinctive features

The fund combines active management, investment grade euro corporate bond exposure and an ESG policy with a quantitative multi-factor overlay, intended to mitigate potential factor imbalances introduced by the ESG criteria. It uses a best-in-class ESG selection approach alongside exclusions, rather than relying on a simple screened universe. The ETF structure has an ongoing charge of 0.19% per year and is listed for secondary-market trading. At 31 August 2026, the portfolio was diversified across 233 holdings, while still expressing strong positioning in financial institutions and industrial issuers.

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Risks

The fund has a risk indicator of 2 out of 7 on a 1-7 scale, and this indicator may change over time. Investment values and income can fluctuate, investors may not get back the full amount invested, and changes in exchange rates may affect returns; the share class is not currency hedged and investors may receive payments in a different currency from their local currency. Credit risk is material because the fund invests in corporate debt and the creditworthiness of issuers may weaken; there is no guarantee that issuers will repay interest and principal, and changes in interest rates will cause fund value fluctuations. Additional risks include concentration risk because the fund has significant exposure to one or a small number of sectors, derivatives risk because derivative use may increase the magnitude and frequency of value fluctuations, securities lending counterparty and collateral realisation risk, and sustainability risk because ESG criteria can alter issuer exposure and cause the fund to forego opportunities or perform differently from funds that do not use ESG ratings.

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Asset manager

The management company is Invesco Investment Management Limited and the investment manager is Invesco Advisers, Inc. Invesco Investment Management Limited is part of the Invesco Group, is authorised in Ireland and regulated by the Central Bank of Ireland. The fund is a sub-fund of Invesco Markets II plc, is domiciled in Ireland and is UCITS compliant.

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