Invesco Finalizes Guggenheim ETF Deal, Pares Fees On BulletShares Suite

April 10, 2018 11:14 am
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Invesco Finalizes Guggenheim ETF Deal, Pares Fees On BulletShares Suite

Asset manager Invesco Ltd. (NYSE:IVZ) finalized its acquisition of Guggenheim's exchange traded funds business and announced new, lower fees on the acquired BulletShares ETFs.

Nearly all of Guggenheim's ETFs have been folded into Invesco's PowerShares family of ETFs. The deal cements Invesco's status as the fourth-largest U.S. ETF sponsor. Guggenheim had $38.8 billion in ETF assets under management as of Feb. 28. The acquisition brings Invesco's ETF assets under management to $215.3 billion on a global basis as of Feb. 28, according to a statement from Invesco. 

“The aggregate purchase price paid by Invesco upon completion of the transaction was $1.2 billion,” the announcement said.

Fighting For Market Share

With the ETF landscape increasingly competitive, acquisitions represent a quick avenue for sponsors to boost assets under management.

As of April 6, Invesco U.S. assets under management excluding what was gained in the Guggenheim deal stood at $139.9 billion. That makes Invesco's PowerShares brand the fourth-largest U.S. ETF sponsor, about $34.5 billion ahead of fifth-place Charles Schwab Corp. (NYSE:SCHW).

“With its American business growing 28 percent with the purchase, Invesco has solidified its position as the fourth-largest ETF issuer in the U.S. with $177 billion in assets,” according to Bloomberg.

BlackRock Inc. (NYSE:BLK), Vanguard Group and State Street Corp. (NYSE:STT) are the three largest U.S. ETF sponsors and control about 85 percent of ETF assets on a combined basis.

Fee Competition

“Invesco also announced that the management fee for the BulletShares ETFs that provide defined-maturity exposure through corporate bond investment-grade portfolios has been reduced to 0.10 percent from 0.24 percent,” according to Invesco.

The BulletShares suite includes over a dozen products, some of which focus on high-yield corporate debt. BulletShares ETFs have a target date year and terminate at the end of that year. For example, the PowerShares BulletShares 2018 Corporate Bond Portfolio (NYSE:BSCI) will terminate at the end of this year.

Last year, PowerShares launched a suite of traditional, pure beta ETFs, some of which have fees as low as 0.04 percent per year. That move gave PowerShares credible funds to use in a broadening fee competition that has swept over much of the ETF industry.

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