Invesco Communications S&P US Select Sector UCITS ETF (XLCS.L)

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This fund seeks to mirror the net total return performance of its benchmark, the S&P Select Sector Capped 20% Communications Index, after deducting associated fees. This specific index tracks the communication services companies found within the broader S&P 500. Individual components are weighted based on their float-adjusted market capitalization, with a cap of 19% per constituent; any weight exceeding this limit is reallocated among the remaining uncapped holdings. To achieve its investment goal, the fund employs a hybrid strategy. It maintains a portfolio of equities, which typically generates the majority of its returns, though these holdings may not precisely replicate the index's composition. To improve tracking accuracy and ensure greater consistency than what purely physical replication could offer, the fund also utilizes unfunded swaps. These agreements with approved counterparties are designed to exchange the difference in returns between the fund's equity portfolio and the Reference Index. Notably, although the fund's primary objective is to replicate the standard net total return index, the swaps it engages in reference an enhanced Withholding Tax version of the index. As a result, the fund's performance, prior to fees, is generally expected to outperform the standard net return index. This ETF is passively managed; therefore, an investment represents the acquisition of units in an index-tracking fund rather than direct ownership of the underlying assets held by the fund.