Invesco And The Rise Of Smart Beta

A recent event hosted by Invesco Ltd. IVZ “echoes sentiment by other asset managers that smart beta ETFs have a long runway ahead, Barclays’ Kenneth Hill said in a report. He maintained an Overweight rating on the company, with a price target of $36.

Smart beta and factor based ETF growth has been strong and there are no signs of a slowdown in the medium term, analyst Hill mentioned. Smart beta ETFs had captured ~22 percent of US ETF equity inflows between 2010 and 2015. Both Invesco and BlackRock, Inc. BLK are targeting around 20 percent annual growth in the next few years

“While we have seen competitive threats increase with more players looking to tap into the attractive growth potential, we believe there is room for many to succeed, and those with established franchises (BLK, IVZ) should have the easiest path,” Hill wrote.

First Mover Advantage

Invesco has a first mover advantage, which is “a key differentiator,” the analyst commented. At its event, the company referred to PowerShares' foray in the smart beta ETF arena that dates back to 2003.

Invesco is focusing on innovating around client needs as they arise. Management also indicated that there were opportunities in the institutional space and fixed income products. “Lastly, the company hopes to benefit from recent trends improving the outlook for packaged solutions, similar to what we have heard from others in the space,” Hill stated.

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