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Invesco to Close Dozens of ETFs in 2020 as Fund Shakeout Continues

Article By Michael Wursthorn in The Wall Street Journal

Fund manager said it will close 42 exchange-traded funds by February

Invesco Ltd. plans to shut down dozens of exchange-traded funds next year, the latest sign that an ETF shakeout is picking up speed.

The Atlanta-based fund manager said it will close 42 ETFs by February, including currency-focused funds, strategies that focus on emerging markets and so-called factor products that tracked value, momentum and other stock qualities in the Russell 1000 index.

Invesco said the closures are part of a rationalization following the purchases of OppenheimerFunds in May and Guggenheim Investments’ ETF business back in 2018. Those deals pushed Invesco’s assets to $1.2 trillion and expanded its heft in the tightly controlled ETF industry.

But the deals also brought a host of overlooked products and other offerings that overlapped with existing Invesco funds, analysts said. With more than 2,000 ETFs in the U.S. alone, asset managers are increasingly willing to prune their own offerings, in part to keep up with cost pressures throughout the industry.

“Management agreed that the 42 funds identified through this process, including 26 overlapping offerings in our fund range from recent acquisitions of Oppenheimer and Guggenheim ETFs, ultimately do not meet investor needs,” said Stephanie Dilorio, an Invesco spokeswoman, adding that the decision gives the firm room to introduce newer ETF products.

The decision comes after Invesco closed as many as 18 ETFs earlier this year. Altogether, asset managers have closed 109 ETFs so far this year, according to Elisabeth Kashner, director of ETF research at FactSet, on top of 79 last year and 127 in 2017.

For investors, fund closures are mostly a headache, analysts said, since it forces investors to eventually liquidate their holdings in the fund, an event that could trigger the payment of taxes.

To read this article in The Wall Street Journal, click here.

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