Invesco targets ETF issuer Guggenheim for acquisition

Aug 3rd, 2017 | By | Category: ETF and Index News

Invesco, the asset manager behind the PowerShares range of ETFs, is rumoured to be in discussions to acquire part of the investment management business of Guggenheim Investments, including the firm’s ETF issuing arm.

Invesco targets ETF issuer Guggenheim for next acquisition

Invesco targets ETF issuer Guggenheim for next acquisition.

The deal, if completed, would mark the second major ETF-related acquisition for Invesco this year following the announcement in April that it would be taking control of Europe-based asset manager Source. That deal sees Invesco add Source’s $25 billion in assets under management, including $18bn in internally managed ETFs and $7 billion in externally managed funds, to Invesco’s own existing global ETF AUM of approximately $120 billion (See: Invesco to acquire ETF issuer Source).

Guggenheim Investments is itself a relative big-hitter in the ETF provider space with an estimated $37bn in AUM across its ETF suite. Over a third of that capital can be found within the block-buster $13.3bn Guggenheim S&P 500 Equal Weight (NYSE Arca: RSP). RSP provides equal-weighted investment in the constituents of the S&P 500 Index which, according to Guggenheim, gives the potential for outperformance by reducing the exposure to the largest, and perhaps most overvalued stocks within the index. However, it has a total expense ratio of 0.20% which is significantly higher than the cheapest market cap-weighted S&P 500 ETF, the Vanguard S&P 500 ETF (NYSE Arca: VOO), which costs just 0.04%.

The firm has 14 other ETFs that are equal-weighted versions of popular cap-weighted indices and is also regarded for its BulletShares range of funds – corporate and high-yield bond ETFs with a defined maturity date.

While Invesco is currently the fourth largest global provider of ETFs by AUM, it is still considerably far off from challenging State Street Global Advisors, which has over half a trillion dollars behind its ETF suite, for third place. It recent moves however do demonstrate an ambition to solidify its position as one of the four great providers of ETFs.

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