Invesco has halved the fee charged by its multi-factor global equity ETF that incorporates strict environmental, social, and governance (ESG) criteria.
Invesco has halved the expense ratio of its ESG-screened global equity multi-factor ETF.
The Invesco Quantitative Strategies ESG Global Equity Multi-Factor UCITS ETF (IQSA) has seen its expense ratio cut from 0.60% to 0.30%.
The fund, which houses $130 million in assets, is listed on London Stock Exchange in US dollars as well as on Xetra and Borsa Italiana in euros.
Investment approach
The fund is actively managed by Invesco’s Quantitative Strategies (IQS) team which has been developing its factor-based, quantitative investment philosophy for over 35 years.
It provides exposure to a portfolio of global equities while targeting returns attributable to the value (i.e. companies perceived to be inexpensive relative to market averages), quality (i.e. companies that demonstrate stronger balance sheets relative to market averages), and momentum (i.e. companies whose historical share price performance or earnings growth have exceeded market averages) factors.
The portfolio is based on a universe of circa 3000 eligible stocks for which IQS maintains factor scores. These stocks are then run through a two-step ESG filter to narrow down the selection pool.
In step one, violators of global norms related to human and labour rights, as well as companies with significant revenue exposure to nuclear power, coal, tar sands and oil sands, military weapons, alcohol, tobacco, gambling, adult entertainment, and genetic engineering are removed.
In step two, the remaining stocks are screened following a best-in-class approach with the top 50% of stocks chosen based on broad ESG performance, climate issues, and stakeholder management.
Stocks making it through the ESG filter are then scored based on their attractiveness with respect to the three investment factors. Securities are then selected and weighted according to a proprietary risk model that seeks to maximize exposure to the three factors whilst controlling sector, country, currency, and stock-specific risk broadly relative to the benchmark MSCI World Index.
Reconstitution and rebalancing occur on a monthly basis.