"Invesco "Israel is a central market in our activity

Shay Yona, Head of Invesco’s marketing division in Israel, began his career in the ETF world about 7 years ago at Source ETF, after several changes in ownership, he became head of Invesco’s Israeli marketing division.

Shay, 43, married plus three, currently lives in Tel Aviv, originally from Holon. When he’s not at Invesco he plays the guitar and says that he tells his wife that if they had to rely on his guitar skills for a living, they would have been very poor.

In Israel, Invesco is known mainly thanks to their popular ETF brand, however most of Invesco’s managed funds are in active investments.

Invesco recently listed several ETFs for trading at the Tel Aviv Stock Exchange and continues to list additional new products. The next product is a listing of the company’s best-known brand in the world, QQQ.

“As of the end of 2021, the volume of capital invested by Israelis in Invesco’s ETFs is about $11 billion, withholding the recently listed ETFs. Another $1 billion is invested in Invesco’s alternative and active products.

“Today there are 36 foreign entities’ ETFs, listed in Israel, we are still in a relatively early stage in the evolution of foreign entities that have a long-term vision for the Israeli market. Israel is a central market for our activities in EMEA.

“Currently, local institutions hold Spider the most, second in Invesco certificates, and iShares third.”

As head of Invesco’s Israeli market division, Shay’s role is to introduce Invesco’s products to Israeli investment firms. Initially it was the standard investment products, ETFs, or active funds, in the last six months, quite a few alternative products, relevant to institutional and certified investors, through Family Office entities.

Shay says that his main challenge is to find products that meet the needs and suitable for the local market. One of the problems is, for example, the accessibility of the products to investors, whether due to a high investment threshold, or long required holding period.”

One of the products Shay recently successfully introduced to institutional entities, and Family Office entities is a global real estate fund. The fund, unlike any other physical real estate investment, is liquid and quoted daily Net Asset Value (NAV). The fund invest in real estate throughout the world, with the help of its experts located in Invesco’s 52 different representations. The fund’s portfolio is of several tens of billions. It is basically an alternative property with no correlation to markets, physically invested in real estate, liquid and valued on a daily basis, and can be purchased through the bank with an ISIN number.

“The fund itself is very diverse, globally dispersed. For example, 5% of the fund are office buildings in Tokyo. Even if a general statement about whether the real estate market is expected to decline following the rise in interest rates, is relevant, this cannot be applied everywhere in the world. The fund invests in peak demand very strong places in terms of real estate.

Another product that Shay introduce is a Senior Loans product. According to Shay, “these are OTC tradable bank loans. The advantage of such product is that loans are not considered a security. In addition, in terms of collateral, these are senior loans and in a variable interest rate loans in accordance with the 3 months LIBOR. It enables investors to shorten their portfolio duration.”

Invesco’s local activity so far focus on institutional investors. Listing ETFs on the local stock exchange is intended for retail clients, and investment advisers.

“Currently, we decided to rely on our marketing capabilities to reach relevant investors.”

"Altogether the conversion process took about 3 years. It was definitely a long and difficult journey, which included various regulatory requirements, and delays that also required the signature of the finance minister that took a long time to receive."

“Our product is simply better. Our product has several advantages in several factors, one of the main factors, is that we use gross and not net indices, our product is cheaper, and other advantages over existing products. Eventually, everyone will recognize our inherent advantage.”

“Investors’ preference constantly change, investors’ tastes about one product or another can change. Previously investors’ preference for ETFs. Furthermore, there is less tendency to buy imitating funds, by Institutional Investors.”

"It's too early to say, but the preliminary purchasing results are quite satisfactory. Prior to our Israeli listing, It was difficult for portfolio managers to buy our products in USD, because it required customers to convert a certain portion of the portfolio to dollars. Now the product is in shekels, traded at the local stock exchange. That allows easier purchase of our certificates."

“We have converted 13 ETFs so far. We are trying to choose the right certificates. Depending on the progress and fund flow, we will convert more products, but we do not want to name a specific target. “

“I think our advantage, and there was a correct management decision with respect, is to operate via a local representative who knows the local players, speaks the language, understands the market, and understands the requirements of local players. We compete not only with other ETF players, but also with foreign investment entities, that offer Private Equity funds of all kinds.”

“We will not issue an ETF on a local index, we can only issue our existing certificates.”

The interview was conducted prior to the decline commenced on Friday 29/4. But the following answers do not depend specific fluctuations in the market, we chose to ask Shay about Invesco's position on various markets in face of increasing volatility, declines in stock prices and investment alternatives.

The position Shay presents is that of Paul Jackson, Invesco's chief economist, who visited Israel several weeks ago. According to Shay, "with respect to MSCI World, Invesco is currently neutral on stocks, underweight in the US stock market, and overweight in the UK, and emerging markets."

“During Jackson’s last visit to Israel, which took place about two weeks ago, he gave a recommendation for Chinese equities for the first time after few years.”

“We have decreased weight in commodities, given the move commodities have made since the beginning of the year. In the context of commodities, we prefer commodity-related companies.”

Shay adds that local israeli institutional investors rarely invest in commodities, in contrast to institutional investors around the world. “We have a broad commodities ETF, an excellent product that has given a wonderful return this year.”

“Real estate is another area in which Jackson is gaining an advantage at the present time, despite raising interest rates. But the emphasis is less on investing in tradable REIT funds, but rather on physical real estate.”

Shay says that the Corona virus drove invetors to buy every stock related to the online and internet, everything related to these areas flew to heaven and got incredible value. As it stands now, we are in a mirror image.”

Shay added that “Invesco has identified a return to the benchmark indices since the end of the fourth quarter of last year. We see shifting from Stock Picking, and a return to the benchmark indices. Investors also shifted from various themes such as – green energy (not necessarily solar), gaming, cloud computing, cyber security, digital health care, and other areas.”

Another point that Shay refer to is that Invesco has identied, in addition to converging the benchmark indices mentioned earlier, also the transition of investment bodies to defensive investment channels, such as the S&P500 low volatility (Low Vol), or S&P equal weight, in order to reduce the impact of high-tech, and also to more defensive sectors such as healthcare and consumer staples”.

Shay says he is trying to take advantage of the connections he has at Invesco to help local entities. For example, when the stock exchange went out on a road show at the time, in order to put the local stock exchange in the MSCI indices, Shay helped arrange a meeting with the relevant party at Invesco. The meeting was successful, and Invesco voted in favor of including Israel in the index.

Another area that Shay is trying to promote is to introduce the local companies that may be relevant for investment by Invesco. Basically, increase the exposure of local companies to Invesco. “We have $ 1 trillion that might be looking for investments in the local market as part of the allocation in one active fund or another, you could say.”

Bottom line. Shay says that “Invesco is here to stay and also to try and contribute to the connections between the Israeli capital market and the other markets, everything is being done to help the local market continue to prosper.”