Invesco's AIM family of mutual funds is launching an asset allocation fund using PowerShares exchange-traded funds as the underlying investments.

The AIM V.I. ETF Allocation Fund has been designed for the variable insurance market.

AIM, of course, is the mutual-fund and institutional asset management arm of Invesco, the parent of PowerShares.

Invesco AIM is not alone among insurance market distributors turning to ETFs for asset allocation funds. Horace Mann, which specializes in variable annuities for the education market, is replacing the active managers in its existing asset allocation funds with ETFs (see story here.)

The move to ETFs within asset allocation funds, and within specific target date funds for the retirement market, is expected to keep increasing as a market trend. Lower fees and efficient access to more niche areas of the market make ETFs a good fit for retirement investors.

The ETF Allocation Fund also illustrates the increasing ways that PowerShares is taking advantage of its parent company in finding new markets and wrappers for its ETFs.

In addition to being distributed by Invesco AIM Distributors, the fund of ETFs will be tactically managed by another Invesco affiliate, the Invesco Multiple Asset Strategies (IMAS) team, which is housed within Invesco Institutional.

IMAS is an alpha-oriented manager, managing more than $6 billion in global tactical asset allocation strategies.