Invesco launches multi-factor ETF suite in the US, attracting USD1bn at launch
Invesco has launched a new multi-factor ETF suite tracking the S&P Quality Value & Momentum Top 90 % Indices in the US, adding to their joint suite of 66 US listed products.
The newly launched suite has already generated USD1 billion in inflows from Municipal Employees Retirement System of Michigan (MERS) and other investors.
The Invesco S&P QVM ETFs are designed to offer a multi-factor tilt on the existing S&P 500 Index, S&P MidCap 400 Index and S&P SmallCap 600 Index benchmarks, trimming down the existing universe through a factor-screen to provide targeted exposure to US stocks with the highest quality, value and momentum multi-factor score. The names and the tickers are: Invesco S&P 500 QVM Multi-factor ETF (QVML); Invesco S&P MidCap 400 QVM Multi-factor ETF (QVMM) and the Invesco S&P SmallCap 600 QVM Multi-factor ETF (QVMS).
“Invesco helped to pioneer factor ETFs in partnership with the trusted methodology of S&P Dow Jones Indices over a decade ago. Together we continue to seek to provide investors with precise access to better return patterns at a lower cost,” says John Hoffman, Head of Americas, ETFs & Indexed Strategies at Invesco. “We are excited to collaborate with both S&P Dow Jones indices to address the needs of clients such as MERS by expanding our partnership on these new QVM multi-factor ETFs.”
“Our allocation to the new Invesco S&P QVM ETF Suite gives us flexible, cost efficient, and liquid access to Quality Value Momentum multifactor exposure across market cap tiers,” says Jeb Burns, Chief Investment Officer of MERS. “We believe the S&P Dow Jones Indices multi-factor methodology enhances our core large, mid, and small-cap exposure, better positioning our portfolio to align with our views on factor allocation.”
“The confidence from MERS in the new Invesco S&P QVM ETF Suite is reflective of not only the growing ETF usage among institutional investors, but also of pension funds’ increasing willingness to consider the lower-cost passive instruments that best meet mandates,” says Hoffman. “We believe this will continue to be a trend among forward-thinking institutions who see value in rewarded factors.”
The launch of these new ETFs aligns with the findings of the Invesco Global Factor Investing Study 2020 which tracks the investing sentiment of over 230 factor investors worldwide. The most recent survey found that 81 per cent of surveyed institutional investors and 73 per cent of responding advisors searching for more tactical tools were increasing their allocation to multi-factor strategies. A majority of both institutional and wholesale investors also used ETFs as the primary vehicle for gaining multi-factor exposure.
“With increasing global interest in factor ETFs, the new S&P Quality, Value & Momentum Top 90% Multi-factor Indices are a natural evolution towards making multi-factor strategies broadly appealing,” says Reid Steadman, Head of ESG & Innovation Indices at S&P Dow Jones Indices. “We’re excited to work with Invesco on this unique take on factor investing.”
The S&P Quality, Value & Momentum Top 90% Multi-factor Indices measure the performance of stocks after excluding those with the lowest quality, value, and momentum multi-factor score. Index constituents are weighted by float-adjusted market capitalisation, subject to certain constraints defined in the index methodology. A 20 per cent buffer is applied to stocks already in the index in order to reduce portfolio turnover. The Indices rebalance quarterly, effective after the close on the third Friday of March, June, September, and December, with a reference date of the last business day of February, May, August, and November, respectively. Weights calculated as a result of the reference date are implemented in the indices using closing prices as of the Wednesday prior to the second Friday of March, June, September, and December.