The $5.9bn Invesco Equally-Weighted S&P 500 (VADAX) and the $250m Invesco VI Equally-Weighted S&P 500 funds (VSEWXV) were supposed to rebalance on 24 April along with the S&P 500 Equal Weight index the products track however the US giant missed the scheduled date.
According to a filing with the Securities and Exchange Commission (SEC), Invesco has contributed around $105m to compensate investors for the performance difference between 24 April and 29 April.
The firm said the omission came after S&P Dow Jones Indices (SPDJI) announced the decision to delay its scheduled rebalance dates in March due to volatility in the equity markets.
While Invesco followed this decision, the firm failed to realise that some SPDJI indices were due to rebalance in April such as the S&P 500 Equal Weight index.
The reason why SPDJI only delayed this index until April is because there is far more emphasis on rebalancing for equal-weighted products compared to market cap-weighted solutions.
“The company noted this delay but not the separation of rebalance dates and omitted rebalancing the funds on 24 April when S&P rebalanced the index,” the SEC filing stated.
“The company will seek reimbursement under applicable insurance coverages and any insurance proceeds received will offset any charge recorded in the company’s financial statements.”
Sign up to ETF Stream’s weekly email here