Description

The Invesco Industrials S&P US Select Sector UCITS ETF (XLIS.L) is structured to replicate the overall net return of the S&P Select Sector Capped 20% Industrials Index (hereafter, the "Reference Index"), factoring in fund charges. This Reference Index focuses on companies within the industrial sector of the broader S&P 500. Its components are weighted based on their publicly traded shares' market value, with an individual cap of 19%. Any weighting exceeding this limit is then reallocated proportionally across the remaining, uncapped constituents. To meet this goal, the fund primarily invests in a diverse collection of stocks. While this equity portfolio generates the majority of the fund's returns, it generally doesn't perfectly match the holdings of the Reference Index. To bridge this performance gap, the fund also utilizes unfunded swap agreements. These are financial contracts with approved third-party institutions that commit to pay or receive the difference between the returns generated by the Reference Index and the returns from the fund's actual equity basket. This strategy is employed to secure a more precise and stable tracking of the Reference Index than could be achieved by simply owning all the index constituents directly. Crucially, although the fund's investment target is to mirror the standard net total return index, the underlying swaps are linked to an optimized, enhanced Withholding Tax iteration of that index. Consequently, the ETF's performance, prior to the deduction of fees, is expected to outperform the standard net return index. This ETF operates under a passive management strategy. When you invest, you are purchasing shares in this passively managed, index-tracking vehicle, not directly acquiring ownership of the individual assets held within the fund.