Invesco in Talks to Buy Guggenheim ETFs: Reports

By Janet Levaux

August 03, 2017 at 09:30 AM

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PowerShares parent company Invesco is in talks to acquire some of Guggenheim Partners' retail funds business, according to several news sources.

Neither company would comment on the matter, but The Wall Street Journal reported a $2 billion price tag for the business shortly after Reuters broke the story.

"Invesco PowerShares is a European-based firm and is trying to become bigger asset provider in the U.S. This acquisition would support that goal," said Alex Bryan, director of passive strategies research for North America at Morningstar, in an interview with ThinkAdvisor.

PowerShares is the fourth-biggest player in the U.S. ETF industry, with about $127 billion in assets as of July 30, according to Morningstar data.

BlackRock's iShares have $1.21 trillion, followed by $758 billion for Vanguard ETFs and $551 billion of State Street's SPDR products.

Guggenheim's ETFs have about $37 billion in assets.

Thus, a merger of Invesco PowerShares and Guggenheim could give it over $160 billion in assets

"Guggenheim … is a bit of a smaller player, and there are benefits to having scale in this industry," Bryan explained. Larger players can take advantage of their big distribution networks and spread fixed portfolio costs over a bigger asset base, for instance.

In April, Invesco struck a deal to buy European ETF provider Source from Warburg Pincus for an undisclosed sum. The purchase includes some $18 billion in assets managed by Source, along with roughly $7 billion in subadvised assets.

— Check out ETFs: Why They Keep Growing on Advisors on ThinkAdvisor.

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