How Invesco’s AI and Software ETF Evolved to Capture Current Opportunities

Invesco recently updated its dynamic software ETF to best capture the current opportunity set.

The Invesco AI and Next Gen Software ETF (IGPT) underwent a series of changes toward the end of August. As part of the fund’s modernization, its name, ticker, underlying index and index provider, investment objective, and strategy all saw changes.

Rene Reyna, head of thematic and specialty product strategy for Invesco, told VettaFi the modifications to the fund reflect the way the issuer was looking at how the space has evolved.

“It [previously]was known as the Invesco Dynamic Software Fund. I think when we saw the release of ChatGPT 3.0, we saw the peak interest in generative AI,” he said. “It was a matter updating our approach and methodology to reflect the evolution we’re seeing in the software space. You cannot reflect that evolution without incorporating AI, without incorporating robotics.”

Reyna said in modernizing IGPT, the firm looked for an approach that included some of the legacy constituents but also advanced the approach to capture trending themes.

In the Newly Revamped Software ETF, Revenue Is a Focus

“When I look at thematic ETFs, the growth that we’ve seen in that particular space, it has become challenging for investors to truly understand how they’re getting exposure,” Reyna explained. “I think for us it was important to use revenue as a driver for that.”

As the firm identified areas within software development that capture the most current opportunities, he said it was important to connect the dots with the revenue streams.

IGPT is looking at three subthemes within the current and future software development realm. This includes platforms that comprise the development tools that cross multiple industries that help power AI.

The second subtheme is artificial intelligence, which, according to Reyna, is the broad ecosystem where software is the connecting component. This includes semiconductors and data storage services.

The final component is robotics and automation. He said this encompasses all the software and components used to control and interact with autonomous devices.

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