Toronto-based Invesco Canada Ltd. launched Invesco S&P 500 Equal Weight Index ETF (Ticker:EQL) , providing equal-weight exposure to the companies that make up the S&P 500 Index, the company announced on Tuesday.
The ETF aims to replicate the performance of S&P 500 Equal Weight Index or any successor thereto on an unhedged basis, in the case of any unhedged units or on a hedged basis, in the case of any hedged units.
“One of the challenges investors face in tracking a market-capitalization-weighted index is that the index may have concentration-risk issues,” says Jasmit Bhandal, head of ETF product strategy and development with Invesco Canada, in a statement.
“The S&P 500 is currently heavily concentrated in a few securities, with the FAANG companies — Facebook, Apple, Amazon, Netflix and Alphabet (Google) — making up almost 12% of the index. A significant portion of the returns are driven by these few securities.”
To help investors avoid such overweighting, the ETF tracks the S&P 500 Equal Weight Index, which weights each company at 0.2% at each quarterly rebalancing.
“This ETF gives investors an alternative way to get exposure to the U.S. equity market,” Bhandal says.
The initial offering of the ETF has now close and units began trading on Tuesday.
On April 9, Invesco announced that it had finalized the acquisition of New York-based Guggenheim’s Investments’ ETF business. With the addition of these ETFs, Invesco Ltd.’s ETF assets under management total more than US$215.3 billion globally, bringing overall assets to $984.2 billion as of Feb. 28.
Invesco also announced its changing the names of more than 20 PowerShares ETFs, effective July 27. The name changes can be found on the firm’s news release.
Name changes on Invesco Canada’s Trimark and PowerShares mutual funds are expected to be completed later this year.