Cheifalo says that the Invesco Canada team focused largely on advisors, who they identified as their core clientele for ETFs, despite having some business in the institutional and DIY segments. Those advisors, he explained, resonated with a few of Invesco’s strategies. Namely, their equal weight ETFs picked up significant flows on the back of concentration risk fears, especially in US equities. They also offered a bellwether NASDAQ 100 ETF which picked up momentum as US tech stocks outperformed broader markets over recent years.
During the 2022 bear market, when cash and cash equivalent products were some of the best performing assets available, Chiefalo says that Invesco’s product suite was ideally placed. He notes that the popular High Interest Savings Account ETFs “didn’t make sense to me at the time.” And, in fact, when those products were forced to revise their yields lower, Invesco offered cash equivalent products that could compete better. Chiefalo’s team has not been afraid to launch products either. They’ve notably expanded their suite of options overlay ETFs as the category has grown more popular among advisors.
Seeking input from advisors along the way, Chiefalo notes that there are some areas where Invesco tends to stay away from. Traditional market-cap index strategies, he says, are the existing wheelhouse of a few other major players. Invesco, he says, looks to complement advisor portfolios in different ways, offering those equal weight allocations or options overlays.
Working within a global organization with mutual fund channels and experienced managers, Chiefalo’s job is as much about what he doesn’t add to Invesco’s Canadian suite as what he does. His approach to managing that tension begins with having an on the ground team. He notes that sometimes global firms can parachute in strategies or even managers based in other regions. His team is in direct communication with advisors and based in Canada. That allows for a more responsive approach where feedback can be solicited for new ideas quickly and efficiently. He notes, too, that the team tries not to launch ETFs for their own sake.
“An ETF is a wrapper. In virtually every case, the wrapper doesn’t really enhance the strategy,” Chiefalo says. “If the strategy makes sense, if there’s persistent value, persistent alpha, persistent risk mitigation, if it’s over a long period of time that the strategy is delivering what it’s promised to deliver, then absolutely, it’s a contender for us to think about putting it in an ETF.”
