Invesco launches fixed income ‘CoCo’ ETF

Invesco has launched a fixed income exchange-traded fund (ETF) giving investors access to the growing pool of higher yielding convertible assets issued by European banks.

Traded on the London Stock Exchange, the US dollar-denominated AT1 Capital Bond Ucits ETF has been launched, Invesco said, at a time of growing market demand for Additional Tier 1 (AT1) assets.

AT1 bonds are contingent convertible (also known as “CoCo”) bonds, which include a mechanical trigger that can write-down the value of the bond or convert it to common equity based on the issuing firm’s level of capital.

In May, US firm WisdomTree launched what it claimed to be the first ETF to access the $170 billion (€144 billion) market in contingent convertible bonds related to European banks’ AT1 bank debt.

Nicolas Samaran, Invesco’s head of Emea ETFs, said: “European banking AT1 assets have become more attractive for investors who are comfortable moving up the risk curve in the search for higher yields.

“The index has historically delivered low correlation to other asset classes, allowing investors to diversify their income strategy.”

©2018 funds europe

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