Invesco has launched the Invesco Goldman Sachs Equity Factor Index Emerging Markets UCITS ETF aimed at investors wanting a unique approach to core emerging market equity exposure.
The new ETF applies the same methodology employed in the firm’s range of multi-factor strategy products, which currently has over USD1.1 billion of assets under management.
The ETF is designed to provide investors with optimal exposure to five factors: Value, Momentum, Quality, Low Beta and Size. Academic research and studies by Goldman Sachs show that each factor has performed better than the broad market over time. The new ETF carries ongoing charges of 0.65 per cent.
Chris Mellor, Head of EMEA ETF Equity Product Management at Invesco, says: “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.”
The objective of the ETF, as well as the existing World and Europe versions, is to outperform a traditional market-cap weighted benchmark with less volatility and maintaining similar country and sector weights. The new ETF provides exposure to more than 300 stocks across 30 emerging markets around the world.
Mellor says: “Until now, factor strategies have focussed 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. We believe our new ETF offers investors something different for their emerging market exposure.
“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.”
In addition to the new ETF launch, Invesco has cut the ongoing charge on the Europe version to 0.45 per cent per annum (from 0.55 per cent) and on the World version to 0.55 per cent per annum (from 0.65 per cent).
