Invesco (IVZ) Eyes Guggenheim Partners' $30B ETF Business
Zacks Investment Research | Aug 02, 2017 10:30PM ET
Invesco Ltd. (NYSE:IVZ) is in talks to acquire the exchange-traded funds (ETF) business of Guggenheim Partners LLC in an effort to expand its asset class. As per people familiar with the matter, Invesco may offer $2 billion.
The ETF business includes a portfolio of fixed income securities that are traded under the name of BulletShares. The business of Guggenheim is said to have assets under management (AUM) worth more than $30 billion.
ETFs are one of the fastest-growing products in the asset management industry. It allows investors the ease of trading the entire portfolio of stocks against trading only one stock. They are often constructed to track a broad market index, which can be done at quite a low cost.
Invesco, the fourth-largest ETF provider in the world, which had $858 billion in AUM as of Jun 30, 2017, has already made such deals. In April, it announced plans to buy a London-based ETF provider, Source, with $25 billion in AUM. If the deal with Guggenheim is finalized, it will be an addition to the already expanding portfolio, which offers ETFs under the PowerShares label.
Invesco’s top line has seen growth owing to continued improvement in its AUM balance. If the deal takes place, further improvement is expected in this regard.
The rumors came amid disputes and disagreements over key management appointments by Chief Executive Officer Mark Walter and Global Chief Investment Officer Scott Minerd. This led to the exit of top managers and discomfort among customers.
Shares of Invesco have lost 6% over the last three months versus the industry ’s rally of 10.3%.
Currently, Invesco carries a Zacks Rank #3 (Hold).
Some better-ranked stocks from the same space are Woori Bank (NYSE:WF) , Och-Ziff Capital Management Group LLC (NYSE:OZM) and Cohen & Steers Inc (NYSE:CNS) each sporting a Zacks Rank #1 (Strong Buy). You can see Zacks Investment Research
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