In London, Invesco underprices BlackRock on Canada and small caps

by , 29th January 2019

Invesco is widening out its core ETF offering in London, listing two plain vanilla ETFs at low prices that seem intended to undercut iShares.

  • Invesco MSCI Canada UCITS ETF (MAPL) – 0.15%
  • Invesco S&P SmallCap 600 UCITS ETF (USML) – 0.14%

The listing of MAPL – presumably short for Maple – widens out Invesco’s core country ETF offering and brings it in line with other European providers (particularly UBS and iShares, which have the two most popular Canada trackers). Although Invesco seems to have comfortably pipped its competitors on price. The second cheapest Europe-listed Canada ETF that we could find charges 0.33%.

USML adds to the wide variety of Europe-listed US small cap trackers. However, in choosing the S&P small cap index – rather than the more popular Russell 2000 – Invesco will be directly competing with only one other fund: iShares ISP6, which has £870M under management. The new listing will not be the cheapest small cap tracker: that crown goes to L&G’s RTWP, which charges 0.12%.

Source: JustETF

Analysis – Clever Invesco

These two products make for smart listings, and for two reasons.

First, the niches Invesco has chosen are good ones. There is solid demand in Europe for both Canada and US small cap trackers. This means the scale required to break even on a 0.14% fee is achievable.

Second, Invesco has chosen the right indexes. The Russell 2000 is a more popular index than the S&P 600. Which is a shame because the Russell 2000 index is a dud, as has been noted by many observers. And can be seen below by comparing the performance of two London-listed US small cap ETFs: ISP6 and DWS’s XRSG, which tracks the Russell 2000.

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