With Eric Pollackov, Global Head of ETF Capital Markets, Invesco ETFs
INSURANCETALKS is an interview series where industry thinkers share their thoughts and perspectives on a variety of market trends and themes impacting indexing.
Eric Pollackov is the Global Head of ETF Capital Markets for Invesco ETFs. In this role, Eric proactively develops relationships with sell-side trading desks, implements capital market strategies for Invesco's ETFs, and develops and measures the success of client interaction.
S&P DJI: Tell us a bit about your role at Invesco and how you serve insurers.
Eric: My role puts me at the center of the ETF ecosystem, where I interact daily with ETF trade desks, exchanges, portfolio managers, and various types of clients. Our team’s goal is to provide the most seamless and efficient execution experience when using any of Invesco’s 219 U.S.-listed ETFs.
With insurers increasingly turning to ETFs, my team and I work in partnership with the institutional insurance group to assist clients in understanding the ins and outs of ETF structure, liquidity, and trading. Whether they are buying ETFs for the first time or adding onto established positions, we provide the information clients need to successfully implement their investment views via Invesco’s vast array of ETF product offerings.
S&P DJI: In the past five years, we have seen ETF AUM in insurance general accounts double; as of year-end 2019, insurers held USD 31.2 billion in ETFs. What are some of the scenarios in which insurance companies may be utilizing ETFs, and why?
Eric: ETFs provide cost-efficient, convenient, and nimble access to core and non-core asset classes, yielding a number of potential applications for an insurer’s general account. One primary use case is for manager transitions. ETFs can help insurers maintain exposure to a given asset class or market, while the due diligence and implementation processes are completed on a separate account mandate. A second application is for tactical beta tilting. Tactical beta can take on many forms, but it is traditionally used to overweight or underweight specific risk factors, sectors, or asset classes to capture short-term investment opportunities. Also notable is the use of ETFs as a liquidity sleeve in the general account to complement individual securities or managers. Holding a small liquidity sleeve of ETFs may allow insurers to facilitate cash needs in a cost-efficient way by liquidating ETF shares to raise cash, rather than meddling with core positions in the portfolio.