The Invesco S&P 500 UCITS ETF has reached $10 billion of assets under management, which has been revealed in an update on Wednesday.
This makes this fund the first of its kind which is listed in Europe to reach this milestone, which is a notable achievement for Invesco.
The market was told in today’s update that $500 million new assets had been raised in the first six weeks of 2020, and Invesco alluded this to strong, consistent demand derived from strong trends and performance in 2019.
The Invesco fund took in almost half of all net inflows into S&P 500 ETFs in 2019, accounting for US$3.4 billion of the total US$6.9 billion, and the landmark hit today shows a real victory for Invesco.
Strong growth was attributed to the relatively low cost of the fund, and its outperformance versus the index.
Doug Sharp, Senior Managing Director and Head of EMEA at Invesco, said: “Last year was a landmark for the European ETF industry as total assets hit the US$1 trillion mark. It was also a record year for our business with just under US$12 billion of net inflows, the third-highest total in Europe. We have seen solid demand for new and innovative products as well as for what you could call ‘core building blocks’ as investors are using ETFs to meet a variety of needs throughout their portfolios.
“The growth in our S&P 500 UCITS ETF, particularly over the past year, indicates that investors are also becoming more aware of the differences between ETFs and how, even for the largest and most liquid benchmarks on the planet, picking the right one can make a material difference in terms of performance.”
Markets and analysts have noted the stronger flows into the synthetic S&P 500 ETFs in 2019, following weaker demand for their physical counterpart.
Interestingly, Invesco also noted that investors are not only considering price when looking at a fund but also on which specific product offering suits the intended outcomes and goals they intend to reach.
The process of fund investing is now becoming more personalised, and individuals have the chance to really gauge with the holdings in order to deliver the greatest potential for the desired outcome.
Gary Buxton, Head of EMEA ETFs at Invesco, explains: “Investors wanting exposure to simple benchmarks generally look first at how much it is going to cost. Our range of portfolio building blocks have some of the lowest costs and best tracking in Europe for core benchmarks. For example, our S&P 500 UCITS ETF has a management fee of just 0.05% per annum and bid-offer spreads typically two to three basis points, meaning it has the lowest all-in cost of the largest competing products in Europe.
“When you are looking for passive exposure to US equities, however, there is more than just cost to consider. Our synthetic replication method enables us to capture all the dividends, gross of tax, on the index constituents. This gives it a clear structural advantage over physically replicating ETFs that must pay dividend withholding tax, which is measurable in terms of performance.”
The fund has seen a gradual rise to be a strong performer, and across 2019/20 it has outperformed its benchmark of 21.6% against the index value of 21%.
The Invesco S&P 500 UCITS ETF features an accumulating dividend treatment, and has an ongoing charge of 0.05% per annum.
This does give Invesco an edge over rival funds, as the S&P 500 is the most traded index in the globe. Within a saturated market, a couple of other alternatives are listed below.
iShares Core S&P 500 ETF
iShares offer another fund which tracks the S&P 500, and the details are noted.
This ETF is listed on the NYSE Arca, and has 505 holdings. It is currently priced at $338.26, which is significantly lower than the Invesco counterpart, and charges a 0.04% charge per annum which is again slightly lower than Invesco.
This ETF has net assets of $219 billion in total.
SPDR S&P 500 ETF Trust
This product is priced at $337.42, and is listed on the NYSE Arca in similar fashion to the iShares Core S&P.
The current management fee is 0.09%, which is a considerable rise on both the Invesco and iShares counterpart. This ETF is passively managed, as are the other two products and deal directly on the exchange that they are listed on.
This ETF has total net assets of $307.85 billion, which is bigger than both the iShares and the Invesco funds that have been offered.