The exchange-traded fund provider is offering further exposure to the US equity market with PowerShares S&P 500 VEQTOR UCITS ETF.

Invesco PowerShares, part of global investment manager Invesco, has launched a US equities-focused exchange-traded fund on the London Stock Exchange.

The PowerShares S&P 500 VEQTOR UCITS ETF is the first in Europe to track the S&P 500 Dynamic VEQTOR Index, which allocates long-only exposure between the S&P 500 Index, the S&P VIX Short-Term Futures Index and cash.

The index seeks to lower risk and volatility, as the firm says the S&P 500 VIX Short-Term Futures Index tends to correlate negatively to the performance of the S&P 500 Index, which provides investors broad exposure to the US equity market.

Additionally, the index involves a “stop loss mechanism” whereby if the index losses hit 2 per cent in the five preceding business days, the entire allocation moves to cash or cash equivalents until losses are reduced.

The fund will invest in a combination of equity securities in the S&P 500 Index, VIX futures, cash or cash equivalents. It aims to offer at least 2.5 per cent exposure to VIX futures and as much as 40 per cent during periods of higher market uncertainty.

“The challenge is to both generate returns while at the same time reduce downside risk,” said the head of Invesco PowerShares, EMEA, Bryon Lake.

“The PowerShares S&P 500 VEQTOR UCITS ETF seeks to manage this challenge by providing many of the characteristics of liquid alternatives and tracking a dynamically managed index which can potentially mitigate high equity market volatility.”

The launch follows that of the PowerShares S&P 500 High Dividend Low Volatility UCITS ETF last month and comes as part of the firm's ongoing drive to strengthen its core US equities offering.

Invesco PowerShares also plans to list the ETF across Irish, French, German, Italian and Swiss exchanges.