Invesco is reducing the annual management fee on its $6.6bn Invesco MSCI World UCITS ETF from 0.19% to 0.05%, making it’s the cheapest exchange-traded fund (ETF) tracking the MSCI World index.
The repricing brings Invesco MSCI World UCITS ETF in line with Invesco’s existing MSCI USA, S&P 500 and Euro Stoxx 50 UCITs ETFs. The four products combined total more than $64bn of assets under management – up from $10bn at the start of 2020.
Gary Buxton, head of product in EMEA at Invesco, said the fee reduction is driven by the strong growth in ETF usage, with European ETF industry assets recently reaching $3.5trn.
“We project that to double over the next five years as ETFs could become the vehicle of choice for an increasingly broad range of both professional and retail investors,” he said.
“We [Invesco] want to position ourselves for further growth by leveraging the scale and efficiency of our swap-based ETF platform to deliver these core beta portfolio-building blocks at competitive prices for our clients.”
The ETF employs a swap-based replication model, meaning it offers investors exposure to the index without owning the underlying securities directly.
Chris Mellor, head of EMEA ETF equity product strategy at Invesco, said: “Since 2018, this model has benefited from a reduced dividend withholding tax rate in certain markets, worth around 0.05% per year versus physically replicated funds for the MSCI World exposure.
“Combining this structural advantage with a fee rate that is now 0.15 percentage points lower than the market average should provide substantial benefit for this exposure.”