The Invesco Real Estate S&P US Select Sector UCITS ETF (XRES) is an Ireland-domiciled sector equity ETF managed by Invesco and traded in U.S. dollars on the London Stock Exchange.

The fund seeks to track the S&P Select Sector Capped 20% Real Estate Index, a benchmark representing real estate companies included in the S&P 500.

XRES follows a passive investment strategy and uses synthetic replication. Rather than necessarily holding the same stocks as the benchmark, the fund holds a basket of securities and uses swap agreements to obtain the performance of the reference index.

The S&P Select Sector Capped 20% Real Estate Index includes S&P 500 companies classified within the real estate sector under the Global Industry Classification Standard (GICS). Its methodology also caps individual constituent weights to limit excessive concentration in the largest companies.

Composition / Exposure Profile

XRES provides exposure to different areas of the U.S. real estate sector, including:

• Residential REITs.

• Industrial and logistics properties.

• Retail and commercial properties.

• Data centers.

• Communication towers and infrastructure.

• Self-storage.

• Real estate services and management.

Although concentrated in a single sector, the strategy covers different segments of the U.S. real estate market. These businesses can respond differently to factors such as interest rates, property demand, economic activity, and changing occupancy trends.

Because benchmark constituents are drawn from the S&P 500, the index universe is concentrated in large U.S. publicly traded companies. XRES can therefore be particularly sensitive to U.S. real estate market conditions and interest-rate movements, which can affect financing costs and real estate valuations.

Structure and Costs

The fund and share class have the U.S. dollar as their base currency, and XRES trades in USD on the London Stock Exchange. The ETF has ongoing charges of 0.14% per year, uses synthetic replication, and is domiciled in Ireland. It operates as part of Invesco Markets plc under the UCITS framework.

Under its synthetic structure, the fund holds a basket of equities that does not need to match the benchmark constituents and uses swaps to obtain the performance of the S&P Select Sector Capped 20% Real Estate Index. This structure also introduces counterparty risk associated with the derivative agreements. 

XRES follows an accumulating income policy. Income generated by the strategy is therefore retained within the fund rather than periodically distributed to shareholders.

History and Evolution of the ETF

The Invesco Real Estate S&P US Select Sector UCITS ETF (Acc) was launched in 2016 to provide targeted exposure to the real estate sector represented within the S&P 500. Since its launch, the fund has maintained a passive strategy linked to the S&P Select Sector Capped 20% Real Estate Index, covering different segments of the U.S. real estate market.

Throughout its history, XRES's performance has reflected factors including U.S. interest-rate cycles, financing conditions, economic activity, demand across different property types, and structural changes in areas such as logistics, data centers, communication infrastructure, and commercial real estate.

Additional Information

Invesco Real Estate S&P US Select Sector UCITS ETF Acc (Ireland) is an exchange-traded fund (ETF), with assets under management totaling $108.13 million.

Over the past 12 months, Invesco Real Estate S&P US Select Sector UCITS ETF Acc recorded a return of 2.95%, with its price trading between $24.25 and $28.67 during the same period.

The ETF is traded under the ticker XRES.