Invesco is launching an ETF, writing that it is aimed at investors wanting a simple, low-cost way to gain diversified exposure to global equity markets.
The Invesco FTSE All-World UCITS ETF will track the performance of the FTSE All-World Index, which offers exposure to more than 4,000 large and mid-sized companies across 49 developed and emerging market countries. The Invesco ETF will have an annual charge of 0.15 per cent, which the firm writes, makes it the lowest-cost ETF among similar exposures in Europe.
Global equity ETFs have been the most popular among investors in every year since 2019, and in the first five months of 2023 have attracted USD13 billion of net new assets, 43 per cent of all equity ETF flows. Data analysed by Invesco show a clear trend over this time period that suggests increasing demand for products that combine developed and emerging market countries.
Gary Buxton, Head of EMEA ETFs and Indexed Strategies at Invesco, says: “A basic investing principle is that spreading your investment around many different securities can reduce the risk compared to investing in individual stocks. Taking it a step further, diversifying across different securities throughout the world can reduce risk versus investing in a single country or region. The idea for our new ETF is to provide every investor the opportunity for well-diversified portfolio, with one simple ETF delivering immediate exposure to the world’s equity markets at a low cost.”
The FTSE All-World Index measures the performance of large- and mid-capitalisation companies from developed and emerging market countries. The market capitalisation of each stock is used to determine how much weight it has in the index. The index is rebalanced on a semi-annual basis.
The ETF will aim to track the index by applying a sampling strategy, which will involve the use of quantitative analysis to select securities by using factors such as country weights, industry sector weights and liquidity. This approach will result in the ETF holding a smaller number of securities than are in the index, with the objective of replicating its performance as closely as possible while reducing the costs normally incurred if you were to invest in every security in the index.
Chris Mellor, Head of EMEA Equity ETF Product Management at Invesco, says: “We believe our new ETF should be suitable for investors wanting a simple, stand-alone global equity product that doesn’t require them to really do anything else after they’ve invested. Alternatively, the ETF could be just as appealing to investors wanting a core base from which they can further diversify their portfolios. They may decide to build on this base over time by adding other ETFs, for example ones investing in bonds or in specific types of companies in which they may be interested.”
Invesco writes that investors can choose between Accumulating and Distributing share classes depending on whether they want to take quarterly distributions or have the income automatically rolled up in the fund. Also available on the London Stock Exchange is a currency-hedged share class for investors who want to reduce the impact of fluctuations in the exchange rates between the GBP and foreign currencies.
