Invesco S&P 500 Equal Weight Index ETF (EQL)
Invesco today announced the launch of Canada’s first exchange-traded fund (ETF) to provide equal-weight exposure to the companies that make up the S&P 500 Index: Invesco S&P 500 Equal Weight Index ETF (EQL). This launch comes after Invesco Ltd.’s recent acquisition of Guggenheim’s ETF business in the U.S.
EQL seeks to replicate, to the extent reasonably possible and before fees and expenses, the performance of the S&P 500 Equal Weight Index or any successor thereto on an unhedged basis, in the case of any unhedged units, or on a hedged basis, in the case of any hedged units. EQL invests, directly or indirectly, primarily in equity securities of companies listed in the United States.
“One of the challenges investors face in tracking a market-capitalization-weighted index is that the index may have concentration-risk issues,” said Jasmit Bhandal, Head of ETF Product Strategy and Development with Invesco Canada.
“The S&P 500® is currently heavily concentrated in a few securities, with the FAANG companies – Facebook, Apple, Amazon, Netflix and Alphabet (Google) – making up almost 12% of the index1. A significant portion of the returns are driven by these few securities,” added Bhandal.
To help investors avoid such overweighting, EQL tracks the S&P 500 Equal Weight Index, which weights each company at 0.2% at each quarterly rebalancing.
“This ETF gives investors an alternative way to get exposure to the U.S. equity market,” said Bhandal.
The initial offering of Invesco S&P 500 Equal Weight Index ETF has now closed. Units in the ETF will be available for trading on TSX when the market opens today.
Three series allow investors to choose the currency exposure that best suits their unique investment goals: CAD-unhedged (EQL), USD-unhedged (EQL.U) and CAD-hedged (EQL.F)
EQL offers investors the following potential benefits:
Balanced exposure: The S&P 500®’s performance is disproportionally dominated by the largest company names. Equal weighting the companies in the index results in reduced portfolio concentration risk and a more balanced portfolio than investing in the S&P 500®
Disciplined rebalancing: Equal-weight exposure is maintained through quarterly rebalancing, which creates a buy-low/sell-high effect over time. Quarterly rebalancing also creates more stable exposure to sectors compared to the S&P 500®, which may reduce the impact of market bubbles versus the S&P 500®
Higher return potential: The S&P 500 Equal Weight Index has historically outperformed the market-capitalization-weighted S&P 500® over the long term2
On April 9, 2018, Invesco Ltd. announced that it had finalized the acquisition of Guggenheim Investments’ ETF business. The acquisition strengthens Invesco Ltd.’s market-leading ETF capabilities3 as well as the firm’s efforts to help meet the needs of institutional and retail clients across the globe. With the addition of these ETFs, Invesco Ltd.’s ETF assets under management total more than US$215.3 billion globally, bringing overall assets to US$984.2 billion (as at February 28, 2018).
For more information on Invesco’s line of factor-based smart beta ETFs, visit invesco.ca.
About Invesco Ltd.
Invesco Ltd. is an independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. NYSE: IVZ; invesco.com.
Commissions, management fees and expenses may all be associated with investments in exchange-traded funds (ETFs). ETFs are not guaranteed, their values change frequently and past performance may not be repeated. Please read the prospectus before investing. Copies are available from Invesco Canada Ltd. at invesco.ca.
1 As at April 30, 2017.
2 Based on the performance of the S&P 500 Equal Weight Index’s over January 8, 2003 (inception) to April 30, 2018.
3 With US$176.5 billion in assets under management globally, PowerShares ranked as the fourth-largest ETF provider globally, as at February 28, 2018. Source: PowerShares. With US$55 billion in smart beta assets under management, PowerShares’ smart beta lineup ranked second in the U.S., as at January 31, 2018. Source: PowerShares and Bloomberg L.P.
There are risks involved with investing in ETFs. Please read the prospectus for a complete description of risks relevant to the ETF. Ordinary brokerage commissions apply to purchases and sales of ETF units.
Some ETFs seek to replicate, before fees and expenses, the performance of the applicable index, and are not actively managed. This means that the sub-advisor will not attempt to take defensive positions in declining markets and the ETF will continue to provide exposure to each of the securities in the index regardless of whether the financial condition of one or more issuers of securities in the index deteriorates. In contrast, if an ETF is actively managed, then the sub-advisor has discretion to adjust that ETF’s holdings in accordance with the ETF’s investment objectives and strategies.
S&P®, Standard & Poor’s® and S&P 500 Equal Weight® are registered trademarks of Standard & Poor’s Financial Services LLC and have been licensed for use by S&P Dow Jones Indices LLC. The S&P Equal Weight Index is a product of S&P Dow Jones Indices LLC and has been licensed for use by Invesco Canada Ltd. This Invesco ETF is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, and S&P Dow Jones Indices LLC makes no representation regarding the advisability of investing in such a product.
Invesco® and all associated trademarks are trademarks of Invesco Holding Company Limited, used under licence.
© Invesco Canada Ltd., 2018
SOURCE Invesco Canada Ltd.
CONTACT: Aysha Mawani, Vice President, Corporate Affairs, Tel: 416.324.7712, [email protected]
Web Site: www.invesco.ca