Invesco launches Nasdaq Next Generation 100 UCITS ETF
Invesco has launched the first ETF in Europe that provides investors access to the next generation of innovators. The Invesco Nasdaq Next Generation 100 UCITS ETF offers targeted exposure to the eligible 101st to the 200th largest securities listed on the Nasdaq stock market.
Just as the large-cap Nasdaq-100 Index excludes financial companies, so too does the new mid-cap Nasdaq Next Generation 100 Index that launched in August of 2020.
Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco, says: “We have worked with Nasdaq for more than 20 years and have built a long-term track record of delivering efficient and targeted exposure to the Nasdaq-100 index. Now, we are delighted to bring to the European market the first ETF capturing the opportunities of tomorrow’s most innovative companies.”
Sean Wasserman, Vice President and Global Head of Index & Advisor Solutions at Nasdaq, says: “By definition, innovators never stand still and Nasdaq indexes are no different. The Nasdaq Next Generation 100 (NGX) is part of our expansion of the Nasdaq-100 ecosystem, which broadens the universe of tracking products to come to market and increases the accessibility for the investing public. Today, over a third of the Nasdaq-100 companies ‘graduated’ from the Nasdaq Next Generation 100, truly representing companies at the forefront of innovation. We are excited that Invesco is launching this ETF to provide access to the next generation of innovators.”
Chris Mellor, Head of EMEA Equity and Commodity ETF Product Management, says: “One of the biggest growth drivers of Nasdaq-listed companies tends to be their level of spending on research and development. By reinvesting a significant amount of their current cashflow back into the company to fund new ideas, they have shown the ability to grow revenues and earnings faster than companies that spend less. Plus, this is not just about technology companies. The next generation segment also provides significant exposure to leading-edge innovators in health care, communications, industrials and several other sectors.”
The constituents of the Nasdaq Next Generation 100 index are capped at 4 per cent although currently the largest name is 3.3 per cent of the index. The largest sectors currently represented within the index are technology (33.0 per cent), consumer services (22.7 per cent), health care (22.0 per cent), industrials (11.8 per cent) and consumer goods (7.2 per cent).
The Invesco Nasdaq Next Generation UCITS ETF will aim to deliver the index performance by investing physically in each of the constituents in proportion to their index weight and rebalancing when the index does. The ETF has an ongoing charge figure (OCF) of 0.25 per cent per annum and is available to trade in either USD or GBP share classes, with dividends automatically reinvested.
Invesco also announces the launch of a synthetically replicated version of its USD5.5 billion EQQQ Nasdaq 100 UCIT ETF. The new Invesco Nasdaq-100 Swap UCITS ETF will employ the same method as the firm uses in its other synthetic ETFs, holding a basket of high-quality securities to provide most of the return and seeking to improve tracking and performance by using swap contracts. The counterparties to the swaps – typically large banks and other financial institutions – agree to pay any difference between the returns of the basket of securities and the index. To reduce risk, swaps are reset when certain conditions are met, often daily.
Mellor says: “With the new EQQS ETF, we now offer low-cost physical and synthetic ETFs on this important large-cap growth index. Investors looking for efficient exposure just need to choose which replication method best suits their individual preferences.”