Invesco has launched a systematic active ETF aiming to outperform global equities but with similar risk-reward characteristics to the benchmark, according to etf.com sister publication ETF Stream.
The Invesco Global Enhanced Equity UCITS ETF (IQGA) debuts with a total expense ratio of 0.24% and is listed on Deutsche Boerse, Euronext Milan and the London Stock Exchange.
The strategy, run by the Invesco Quantitative Strategies (IQS) team, has been in existence since 2005 and targets 1% outperformance per year versus the MSCI World Index with a tracking error in the 1%-1.5% region.
It uses a proprietary model to identify attractive investments within the global large- and mid-cap equity universe before an optimization process finds the optimal trade-off between risk considerations, transaction costs and the portfolio’s exposure to value, quality and momentum factors.
Erhard Radatz, global head of portfolio management at Invesco Solutions, said, “Our philosophy is based on an expectation that cheap will outperform expensive, trends will persist for a while and high quality will beat low quality.”
“Results since the launch of the strategy 20 years ago seem to support this,” he added.
Meanwhile, Gary Buxton (pictured), head of EMEA and APAC ETFs at Invesco, said the new ETF is “a great example of an active approach that fits seamlessly into our efficient ETF structure.”
“An ETF following such a repeatable, systematic process is a natural extension to the rules-based, beta and smart beta ETFs currently available,” he noted.
Invesco joins a host of other issuers including HSBC, Schroders, Goldman Sachs and BNP Paribas that have recently or are about to launch low-tracking-error active ETFs.
This article was originally published at etf.com sister publication ETF Stream.
