Invesco Sees ETFs Bridging the Active-Passive Divide
- The active-passive spectrum widens as products evolve beyond traditional approaches.
- New strategies blend a rules-based foundation with human judgment.
- Investor preferences are driving the shift toward more flexible ETF solutions.
Invesco (IVZ) is navigating a changing ETF landscape where the boundaries between active and passive management continue to dissolve, the firm's global head of ETF and index investment, Brian Hartigan, told etf.com.
As investor demand evolves, Invesco's recent active ETF launches represent how traditional index providers and active managers alike are developing products that occupy the middle ground between purely passive and fully discretionary approaches.
Invesco Eyes Evolving ETF Opportunity
Hartigan said in the interview that the firm sees opportunity in this evolving space.
"We're kind of hitting the sweet spot of evolution into active," Hartigan said, describing how investors are recognizing "a spectrum between fully passive and stock pickers active." He noted that Invesco hasn't built its ETF business on "super low cost" products but rather on "building or defining better indices or better rules-based approach."
The Atlanta-based firm's new funds include the Invesco QQQ Hedged Advantage ETF (QQHG), the Invesco Comstock Contrarian Equity ETF (CSTK) and the Invesco Managed Futures Strategy ETF (IMF).
Read More: Invesco Expands ETF Lineup with 3 New Active Strategies
The traditional divide is breaking down as index approaches incorporate more active elements and active strategies become more systematic, according to Hartigan.
"The way the benchmark approach would work is either index providers come to us with an idea and we launch it, or we iterate," he explained. "When you pair the two to create some flexibility, you don't need to create all of those iterations and those rules around benchmark changing."
Beyond Traditional Categories
This emerging middle ground provides both structure and flexibility, Hartigan suggested. The systematic foundation provides consistency while allowing portfolio managers to make targeted adjustments.
"It's more around the edges on how you address liquidity, how you address certain evolutions within the market," he said, while emphasizing these products don't make dramatic tactical shifts.
"Transparency has become kind of table stakes," Hartigan said. "That's what investors want, whether that's transparency of the rules via a benchmark, or transparency in the holdings, or even transparency in the outcome possibilities."
Hartigan said that investors are increasingly seeking strategies that maintain the benefits of ETFs while incorporating active elements. "Our clients are coming to us with increased demand for ETFs because of the liquidity, the efficiency of it and just the modernization of the structure," he said.
The growth of these hybrid approaches is reshaping not just product development but also how investors build portfolios.
"It's blending the definition of active from just an active manager to an active allocator," Hartigan said. "So, in many ways, we both share the burden of active."
