Industry Updates

Invesco doubles securities lending limit across over 50 ETFs

Over 50 ETFs will see their securities lending limit rise from 15% to 30%

Lauren Gibbons

ETF money

Invesco is set to double the securities lending levels on a swathe of ETFs as it aims to boost the price competitiveness of its product range.

Subject to the approval of the Central Bank of Ireland, over 50 ETFs will see their maximum securities lending level double from 15% to 30% including the $9.7bn Invesco EQQQ Nasdaq-100 UCITS ETF (EQQQ).

In the shareholder notice, Invesco said: “The directors have determined that this increase in securities lending is appropriate, proportionate, and does not impact on the investment manager's ability to manage and monitor the risks arising from the increase in securities lending.

“This measure aims to increase consistency and price competitiveness of Invesco's product range.”

The asset manager also will be lowering the minimum subscription amounts for 11 ETFs.

EMQQ will see its minimum subscription amount decrease from 10,000 to 3,000 shares while the $2.2bn Invesco MSCI USA ESG Universal Screened UCITS ETF (ESGU) will be reduced from 25,000 to 15,000 shares.

According to Invesco, it does not take a share of revenues made by lending, with the ETF receiving 90% while 10% goes to the lending agent.

The European Securities and Markets Authority (ESMA) has previously expressed concerns about fee and revenue splits between the asset managers and securities lending agents, stemming from suggestions they return only between 50-65% of the gross revenues to the end investor.

Last year, Invesco started including its ESG ETFs within the securities lending programme, stating that “additional considerations have been made for these products”, after issuers have traditionally avoided securities lending for ESG ETFs following worries about reputational damage and collateral problems.

Elsewhere, the US asset manager recently cut the fees of four equity and bond ETFs including its $65m Russell 2000 ETF.

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