Atlanta-based money manager Invesco has agreed to buy Guggenheim’s ETF business for $1.2 billion.
The deal will bring Invesco’s total assets to $196bn and consolidate its position as the fourth largest ETF provider in the US. The deal will close in the second quarter of 2018, the Financial Times reports.
It is Invesco’s second acquisition of an ETF provider this year after it acquired London-based Source for an undisclosed sum.
By acquiring Source, Invesco hoped to break into Europe’s rapidly expanding ETF market. But by acquiring New York-based Guggenheim, Invesco is merging for style rather than geography.
Guggenheim’s biggest ETFs by assets are its equal-weighted S&P 500 trackers (RSP, RYT), which have over $15bn under management between them. Next biggest are its “BulletShares” corporate debt trackers which offer investors the ability to build bond portfolios with common maturity dates.
Invesco’s offering is very different and is concentrated in smart beta ETFs – an investment class it helped pioneer. Its most successful ETF by far is its NASDAQ tracker (QQQ). With $52bn in assets, QQQ is one of the biggest ETFs in the world.
The acquisition comes at a hard time for Guggenheim, which has been suffering from well-reported internal discord after a restructure of its sales team. Guggenheim has also seen competitors replicate and underprice RSP, its flagship product, forcing it to cut its annual fee in half to 0.20%.