Invesco new”VWCE” at 0.15% TER

[kaytiedid]

Invesco has launched Europe’s cheapest ETF offering exposure to developed and emerging markets, undercutting its rivals State Street Global Advisors (SSGA) and BlackRock, ETF Stream can reveal.

The Invesco FTSE All-World UCITS ETF (FWRA) is listed on the Six Swiss Exchange, London Stock Exchange and Borsa Italiana with a total expense ratio (TER) of 0.15%.

Invesco FTSE All-World UCITS ETF:

• Over 4000 companies

• Across 49 developed and emerging countries

• For just 0.15% per annum

• In 1 simple, low-cost ETF

Source: here

KID in english here https://api.fundinfo.com/document/e...756/KID_GB_en_IE000716YHJ7_YES_2023-05-09.pdf

FWRA hits the market two basis points (bps) cheaper than SSGA’s SPDR MSCI ACWI IMI UCITS ETF (SPYI), which slashed its fees from 0.40% to 0.17% in March this year, undercutting BlackRock’s $6.4bn iShares MSCI ACWI UCITS ETF (SSAC), priced at 0.20%.

Vanguard is still at 0.22%

• VWCE includes 3691 holdings
• FWRA includes 4000 holdings

Thoughts?

 

[resjudicata]

@kaytiedid Vanguard is at 0.25% per year, don’t forget to add the annual “transaction fee” of 0.03%.

Invesco is using optimized sampling.

Just looked at the KIID and it has no transaction costs, so the yearly costs of 0.15% is accurate.

Edit: False information deleted

 

[janetmal]

@resjudicata We should also not forget the dividend leakage to get a more complete idea of the costs. This is around 0.20%-0.25% depending on the year for a world ETF domiciled in Ireland, so the total costs are 0.45%-0.50%. All physical ETFs have dividend leakage though, this is not something unique to Vanguard.

 

[wrennelson143]

@janetmal Damn, never took dividend leakage into consideration.

 

[resjudicata]

@janetmal Where can i read up on this?

 

[janetmal]

@resjudicata This is a good start: https://www.bogleheads.org/wiki/Nonresident\_alien\_investors\_and\_Ireland\_domiciled\_ETFs

 

[christodoulos]

@resjudicata

Invesco is using optimised sampling

So does VWCE.

The stocks the ETF actually holds will be significantly less than in VWCE.

What is this based on? Did they publish their actual holdings?

 

[resjudicata]

@christodoulos Yes they have published a full list of their holdings. There are about 1800 holdings.

 

[lovelygrace]

@resjudicata How is it possible not to have transaction costs? Does it not rebalance? Maybe it's 0 because it hasn't done so yet.

 

[resjudicata]

@lovelygrace A lot of long running ETFs don’t have TX-costs, don’t know why but i prefer low costs, so..

 

[tatorgirl]

@lovelygrace Some funds even report negative transaction costs. Monevator touches on it here: https://monevator.com/transaction-costs/

 

[jrchristian]

@resjudicata Where did you find the KID? I had no luck on Invesco's ETF site (https://etf.invesco.com/ie/institutional/en/product/invesco-ftse-all-world-ucits-etf-acc).

I expect they will list TER, swap fee, & transaction costs. However, these will not tell the whole story, as the swap version will pay no withholding tax on dividends. They could still outperform if TER + transaction costs are as high as Vanguard's (but swap counterparty & Invesco would be taking much of the withholding difference).

We have the interesting comparison between these three:

1. iShares S&P 500 (0.07% TER + 0.02% trans = 0.09%) [physical, pays WHT, has share lending income]
2. Invesco S&P 500 Swap (0.05% TER + 0.04% trans = 0.09%) [website lists swap fee = 0.04%]
3. iShares S&P 500 Swap (0.07% TER + 0.11% trans = 0.18%) [website lists volume-weighted average swap fee = ~0.0193%]

In real terms, 3 outperforms 2, 2 outperforms 1. (but 3 is also very young)

 

[shellbyhc]

@jrchristian Here it is in english, it's under the "Key documents" section: https://etf.invesco.com/sites/default/files/documents/IE000716YHJ7_kiid_en.pdf

It uses physical replication, no swaps involved.

 

[jrchristian]

@shellbyhc Great find (doesn't appear in "key documents" section for me, maybe due to client region/type cookies [I'm IE/institutional])!

It's weird that the German KID classes risk as 4 out of 7, while the English KIID says 6 out of 7 for the same ISIN (IE000716YHJ7). Was there always a discrepancy?

 

[resjudicata]

@jrchristian Here’s the KID (in German since i’m in Germany)

https://etf.invesco.com/sites/default/files/documents/IE0000QLH0G6_kid_de.pdf

 

[kaytiedid]

@resjudicata here is in english https://drive.google.com/file/d/1aWx4ILvd9FxY0cJAXF0833SeDCfiWNis/view?usp=sharing

 

[jrchristian]

@resjudicata Thank you! Very interesting. If you substitute the ISIN, you can get the accumulating ETF KID as well (https://etf.invesco.com/sites/default/files/documents/IE000716YHJ7_kid_de.pdf). But if you substitute "de" for "en" (in line with their usual naming pattern), it fails to deliver an English version.

 

[kaytiedid]

@resjudicata

The stocks the ETF actually holds will be significantly less than in VWCE.

This is not right.

VWCE includes 3691 holdings (source)

FWRA includes 4000 holdings (source)

 

[resjudicata]

@kaytiedid Thank you, i stand corrected.

 

[resjudicata]

@kaytiedid But according to Invesco's information the ETF only holds about 1800 holdings. I think the sampling is quite a hit here.