Industry Updates

Invesco infrastructure ETF to increase in size following rule change

Market cap requirement reduced to $250m

Theo Andrew

a group of men working on a construction site

The Invesco US energy infrastructure ETF is set to increase in size after Morningstar reduced the minimum market capitalisation on the index following a consultation.

The change will see the underlying index of the $264m Invesco Morningstar US Energy Infrastructure MLP UCITS ETF (MLPS) – the Morningstar MLP Composite index – exclude companies with a market capitalisation of under $250m.

As a result of the change, Invesco said the index will grow in constituents, increasing its diversity and liquidity profile.

It added the adjustment was made due to the shirking number of master limited partnerships (MLPs) – a limited partner structured company able to be traded on the stock exchange – in the investment universe.

Currently, the index targets the top 97% of MLPs by market capitalisation with a capped exposure of 10%.

Infrastructure ETFs buoyed by Biden early-term spending

Christopher Mellor, head of EMEA ETF equity and commodities product management at Invesco, said the decision to reduce the company side threshold was taken after a consultation.

“The analysis that Morningstar shared as part of this consultation suggested that this change is likely to increase the number of components in the index, increase diversification and improve the overall liquidity profile of the index.

“Additionally, the number of MLPs in the investible universe has been shrinking as some partnerships convert to C-Corp structures or roll up into parent companies, this change enables a more diversified exposure.”

Featured in this article