Invesco EUR AT1 CoCo Bond UCITS ETF USD Hedged Acc

Issuer: Invesco

Asset Class: Fixed Income

TER: 39

Trading Currency: USD

Pays Income: False

Listing Date: 23 Jan 2026

Ticker: EATU

ISIN: IE000WQJ37B1

This fund offers targeted exposure to the European Additional Tier 1 (AT1) Contingent Convertible (CoCo) bond market. AT1 CoCos are hybrid debt instruments issued by European financial institutions to meet regulatory capital requirements under Basel III. They are characterized by higher yields compared to more traditional corporate or sovereign bonds, which serves as compensation for their unique risk profile. These securities are designed to absorb losses during periods of financial distress for the issuing bank, which can trigger events such as coupon cancellation or conversion into equity. This specific share class is designed for investors who wish to access this asset class while hedging against currency fluctuations between the euro and the U.S. dollar.

The product is tailored for investors seeking enhanced income generation within their fixed income allocation and who possess a higher tolerance for risk. The elevated yields can significantly boost portfolio returns, particularly in environments with low prevailing interest rates. However, potential investors must be fully aware of the inherent risks associated with CoCo bonds, including the potential for principal loss or the suspension of income payments if an issuer's capital ratios fall below a predefined regulatory threshold. It can function as a strategic, diversifying satellite holding for sophisticated investors who comprehend the complexities and subordinated nature of these financial instruments.

The fund's objective is to track the performance of an index comprising euro-denominated AT1 CoCo bonds from developed market issuers. By investing in a diversified basket, the fund mitigates the idiosyncratic risk of any single issuer. Utilising a physical replication method, it directly holds the underlying bonds. As an accumulating share class, all income generated by the portfolio is reinvested, facilitating long-term capital growth through the power of compounding. The embedded currency hedging mechanism makes it an appropriate choice for those looking to neutralize the impact of foreign exchange volatility on their investment outcomes.