Invesco is set to compete with ETF giants BlackRock and Vanguard with its latest fixed income ETFs, offering exposure to UK gilts at a fraction of the price, ETF Stream can reveal.
Only available in the UK, the Invesco UK Gilt ETF (GLTP) and Invesco UK Gilt 1-5 Year ETF (GLT5) will list on the London Stock Exchange in the next two weeks. The two funds offer exposure to UK government bonds with GLT5 offering exposure to bonds with maturity dates of 1-5 years.
The war on fees now moves to the fixed income market as Invesco has pinned a management fee of only 0.06%.
Although Invesco’s competitors have released similar products over the last 13 years, the Vanguard UK Gilt ETF and the iShares Core UK Gilts ETF charge a higher expense ratio of 0.12% and 0.20%, respectively.
The UK government bond offering follows Invesco’s recent US treasury bond ETF range which launched back in January. The range also charged only 6 bps in the company’s bid to offer affordable fixed income products. Furthermore, Invesco also launched two plain vanilla ETFs in the same month with a price undercutting iShares too.
The timeliness of the launch fits well with the uncertainty of Brexit, as Parliament is yet to resolve a deal and have also introduced the possibility of postponing the UK’s separation from the European Union.
Invesco says it was fitting to launch the gilts ETF in the UK only as the company is located in London as well as the majority of its clients being domiciled there too. The company has been developing its core beta range over the past 18 months and will look to expand, in terms of geography and fixed income products, when the time is right.