Invesco ETF launches first UCITS ETF tracking MSCI World Equal Weight Index

Invesco ETF launches Europe’s first ETF tracking the MSCI World Equal Weight Index. Diversified global equity ETFs have attracted more than $35 billion in net new assets in 2024, making this ETF category the second largest in terms of year-to-date flows behind US equity exposures.

Sign up to our free newsletters

By ETFWorld.co.uk

Gary Buxton, Head of ETFs and Index Strategies for EMEA and APAC at Invesco

The Invesco MSCI World Equal Weight UCITS ETF offers investors an alternative approach to global equity exposure that reduces the concentration risk typically associated with a standard market-cap weighted methodology.

Invesco’s new ETF is particularly attractive to investors concerned about potential volatility in global markets, given that the combined weight of the top 10 holdings in the MSCI World Index currently represents 25% of the index, the highest concentration in over 40 years. US-focused ‘equal weight’ ETFs have already won over investors with over $5 billion in net flows since the start of 2023, and this new launch gives investors the opportunity to adopt a less concentrated exposure to the global equity market as a whole via a single vehicle.

‘ The sharp fall in equity markets in July, although relatively brief, reminded us of how quickly corporate trajectories and investor sentiment can change. Our new ETF offers investors a sensible way to maintain broad exposure to global equity markets, while being less sensitive to the performance of individual companies, ’ explains Gary Buxton, Head of ETFs and Index Strategies for EMEA and APAC at Invesco.

The MSCI World Equal Weight Index is constructed from the original MSCI World Index and incorporates the same stocks, but weights each company equally at each quarterly rebalancing date rather than weighting stocks according to their free float-adjusted market capitalisation.

The index comprises more than 1,400 large- and mid-cap stocks from 23 developed markets. The manager will track the index using a sampling strategy, which involves using quantitative analysis to select stocks for the index using factors such as country and industry weightings and liquidity.
‘ Most investors instinctively think that an equal weighting approach is a way of spreading risk at the stock level. While this observation is entirely valid, an ETF that tracks the MSCI World Equal Weight index is also more balanced from a sector and geographical point of view. For example, the allocation to the US is around 42%, compared with over 70% for the standard index, allowing for greater exposure to Japan, the UK and other developed markets, ‘ explains Chris Mellor, Head of Equity ETF Product Management for EMEA at Invesco.

The fund joins the ranks of Invesco’s existing S&P 500 Equal Weight and Nasdaq-100 Equal Weight UCITS ETFs, which already offer alternative approaches to two of the fund manager’s flagship funds.

ETF Fact Sheet :

Source: ETFWorld.co.uk