is adding more Qs to its fund lineup, a wager by the world’s fourth-biggest issuer of exchange-traded products that investors’ love affair with technology stocks will continue.
The Atlanta-based asset manager will launch four new investment products tied to its flagship ETF, the
Invesco QQQ Trust
fund. At $134 billion, the Qs, as it is known across Wall Street, has grown to become one of the biggest exchange-traded products in the world and accounts for roughly 42% of Invesco’s ETF assets.
QQQ offers investors exposure to the 100 biggest nonfinancial companies listed on Nasdaq Composite Index and has proved to be a huge draw since the throes of the 2008-09 financial crisis. The four new products look to build on that popularity and help Invesco compete in an industry dominated by
Vanguard Group and
State Street Corp.
“This is going to be an important part of our growth,” said John Hoffman, Invesco’s head of Americas, ETFs and indexes strategies. “We’re trying to find all points in the ecosystem and make sure we’re there to support it.”
The new offerings have a retail bent and are rather simple as far as ETFs go. The Invesco Nasdaq 100 ETF (QQQM) will be a lower-cost version of QQQ designed specifically for buy-and-hold investors. Another, the Invesco Nasdaq 100 Index Fund (IVNQX) isn’t an ETF at all. It is a mutual fund aimed at retirement-account investors, some of whom are restricted from owning ETFs.
The new suite is rounded out by a junior QQQ that features the second 100 biggest Nasdaq stocks (QQQJ) and an actively managed version that will hold the 25 stocks of the QQQ with the biggest growth prospects (QQQG).
Together, the new funds represent one of Invesco’s biggest and most important product launches since a wave of closures following the purchases of OppenheimerFunds in 2019 and Guggenheim Investments’ ETF business in 2018. Those deals added a host of new offerings that broadened Invesco’s reach, especially overseas, as well as a glut of overlapping and overlooked products that Invesco closed.
The stakes remain high for Invesco. Shareholder activist Trian Fund Management has built up a roughly 10% position in the asset manager, along with a similar stake in smaller rival
Janus Henderson Group
PLC, The Wall Street Journal reported earlier this month. Trian wants to force some consolidation within the industry, building a rival to the biggest asset managers in the world. An Invesco spokeswoman said the firm welcomed high-quality investors but declined to comment further.
Mr. Hoffman says he doesn’t expect the four QQQ offshoots to stunt the growth of the flagship fund. QQQ is the second-most traded ETF in the U.S., making it highly liquid, an important component for big institutions that want to trade in and out of positions with few hitches.
And other than QQQM—the ETF that will be 5 basis points cheaper than QQQ—the other offerings serve distinct roles that would lend themselves to new money rather than transfers from QQQ.
The tech trade has been a clear winner over the past several years, as shares of those companies have been favored for their unrivaled growth and their resilience through economic dips, including the recent crisis brought on by the coronavirus pandemic.
Although the pandemic has crippled some industries, technology companies have been able to grow as people lean on the offerings of those companies to work, to stay connected with friends and families and to entertain themselves.
That has pushed QQQ up 39% so far this year, outpacing the broader Nasdaq index by roughly 6 percentage points. Over the past 10 years, the ETF is up nearly six times.
But tech stocks aren’t impervious. The trade stumbled in September, dragging the broader stock market down with it amid myriad concerns ranging from ongoing shocks from the coronavirus to worries about whether the shares had climbed too far too quickly. The fund suffered some of its biggest outflows ever, shedding more than $6 billion on two separate days in September, according to FactSet.
Still, nearly $15 billion in net new money has flowed into QQQ this year, FactSet’s data show.
Mr. Hoffman says QQQ and its offshoot funds are more than just a collection of technology companies. They include exposure to a number of sectors that use tech to their advantage, including biotechnology and retail.
“Innovation has never been so important,” said Mr. Hoffman. “It couldn’t be more front and center today [than] during a pandemic.”
Write to Michael Wursthorn at [email protected]
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