Invesco launches multi-factor emerging market ETF

Move comes after passive flows into IA Global EM sector hit £83m in Q1



Invesco has launched an emerging market ETF for investors which will it says replicate its existing range of multi-factor strategies that have more than $1.1bn under management.

The Invesco Goldman Sachs Equity Factor Index Emerging Market Ucits ETF will offer investor exposure to five factors: value, momentum, quality, low beta and size.

It will track the Goldman Sachs Equity Factor Index Emerging Markets Net Total Return and is listed on the London Stock Exchange.

With an ongoing charges figure (OCF) of 0.65%, the ETF offers exposure to more than 300 stocks across 30 emerging markets around the world.

Chris Mellor (pictured), head of EMEA ETF equity product management at Invesco, said: “The difficult part for investors has always been how to capture the outperformance potential of individual factors throughout the cycle.

“The strategy used in our ETF combines factors efficiently, taking into account the volatility and correlations between each factor.”

Invesco said the objective of the ETF is to outperform a traditional market-cap weighted benchmark while maintaining similar country and sector weights.

Recent data from Strategic Insight revealed that passive inflows into the IA Global Emerging sector hit £83m in the first quarter of 2018, indicating many investors are using index trackers when it comes to investing in the region.

Mellor added: “Until now, factor strategies have focused predominantly on developed markets. However, we’re now seeing the quality of data on emerging market companies improving to the point where we can also capture these long-term drivers of outperformance in these markets.

“As these ETFs aim to deliver better returns than traditional benchmarks, but with lower volatility, investors may want to use them as stand-alone replacements or to supplement their existing core holdings.”

Slashed fees

Invesco also announced it has cut the OCFs on its Europe version to 0.45%, down from 0.55%, and on the World version to 0.55%, from 0.65%.

This follows Invesco’s decision to slash pricing on sector ETFs in June. OCFs on 10 funds all tracking S&P indices were reduced to 0.14% from 0.30% previously.

Earlier this year, Invesco stepped down as investment manager on the Invesco Perpetual Enhanced Income Trust after a spat with the board, before eventually resuming its role as manager.

In February, the firm announced plans to drop the Perpetual, PowerShares and Trimark names in a move towards having one unified global brand.