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Introducing the first Saudi Arabia ETF in Europe

Saudi Arabia is in the early stages of a huge social and economic transformation, and you can now gain exposure to the growth opportunities through our new fund. This is the first ETF in Europe that provides access to the Middle East’s largest economy. Introducing the first Saudi Arabia ETF in Europe.

Find out:

• What’s driving the growth in Saudi Arabia
• Why we think it’s worth considering investing in Saudi Arabia
• About the index and our Saudi Arabia ETF

Product description

The Invesco MSCI Saudi Arabia UCITS ETF aims to provide the performance of the MSCI Saudi Arabia 20/35 Capped Index, after the impact of fees.

The MSCI Saudi Arabia 20/35 Capped Index captures the large and mid-cap securities of the Saudi Arabia market. The weight of the largest group entity in the index is constrained to 35% and the weights of all other entities are constrained to a maximum of 20%. The index covers approximately 85% of the free float-adjusted market capitalization in Saudi Arabia.

Find out more

Investment risks

Investors should note that the price of your investment may go down as well as up. As a result, you may not get back the amount of capital you invest.

As this is an emerging markets ETF, investors should be prepared to accept a higher degree of risk than for an ETF investing in the securities of issuers in other more established economies or developed countries, as difficulties in dealing, settlement and custody could arise.

The Fund is exposed to the risk of bankruptcy, or any other type of default of the counterparty related to any trading transaction entered into by the Fund.

In order to reach its investment objective, the Fund enters into swap agreements which provide the performance of the Reference Index, and may imply a range of risks which could lead to an adjustment or even the early termination of the swap agreement.

On-exchange liquidity may be limited due insufficient demand, Reference Index suspension, a decision by one of the relevant stock exchanges, or a breach by the market maker of respective stock exchange requirements and guidelines. This may result in share prices that differ significantly from the NAV.

Important information

By accepting this document, you consent to communicating with us in English, unless you inform us otherwise.

This email contains information that is for discussion purposes only, and is intended only for professional investors pursuant to Directive 2004/39/EC (MIFID) Annex II Section in Austria, Belgium, Finland, France, Germany, Italy, Luxembourg, the Netherlands, Norway, Sweden and the UK, Qualified Clients in Israel, and Qualified Investors in Switzerland. Without limitation, this e-mail does not constitute an offer or a recommendation to enter into any transaction. When making an investment decision, you should rely solely on the final documentation and any prospectus relating to the transaction and not this summary. Investment strategies involve numerous risks. Any calculations and charts set out herein are indicative only, make certain assumptions and no guarantee is given that future performance or results will reflect the information herein. Investors should consult their own business, tax, legal and accounting advisors with respect to this proposed transaction and they should refrain from entering into a transaction unless they have fully understood the associated risks and have independently determined that the transaction is appropriate for them. In no way should we be deemed to be holding out as financial advisers or fiduciaries of the recipient hereof.

UCITS ETF’s units / shares purchased on the secondary market cannot usually be sold directly back to UCITS ETF. Investors must buy and sell units / shares on a secondary market with the assistance of an intermediary (e.g. a stockbroker) and may incur fees for doing so. In addition, investors may pay more than the current net asset value when buying units / shares and may receive less than the current net asset value when selling them.

The offering documents and financial reports for the products are available at etf.invesco.com.

German investors may obtain the offering documents free of charge in paper or electronic form from the issuer or from the German information and paying agent (Marcard, Stein & Co AG, Ballindamm 36, 20095 Hamburg, Germany).

In Israel, the contents of this document are restricted to Qualified Clients (pursuant to the First Schedule to the Israeli Regulation of Investment Advice, Investment Marketing and Investment Portfolio Management Law, 1995) only and are not intended for retail or private investors who are not Qualified Clients.

The representative and paying agent for the sub-funds of Invesco Markets plc, Invesco Markets II plc, and PIMCO Fixed Income Source ETFs plc in Switzerland is BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, 8002 Zurich, Switzerland. The offering documents, articles of incorporation and annual and semi-annual reports may be obtained free of charge from the representative in Switzerland. The ETFs are domiciled in Ireland.

The publication of the supplement in Italy does not imply any judgment by CONSOB on an investment in a product. The list of products listed in Italy, and the offering documents for and the supplement of each ETF are available: (i) at etf.invesco.com (along with the audited annual report and the unaudited half-year reports); and (ii) on the website of the Italian Stock Exchange borsaitaliana.it.

All investment decisions must be based only on information contained in the prospectus, the KIID/KID, the supplement and in the most recent audited annual report or unaudited semi-annual report. Investors should read the specific risks of any product they plan to invest in, which are noted in the prospectus, the KIID and the supplement. Past performance does not guarantee similar future performance. For details on fees and other charges, please consult the prospectus, the KIID and the supplement of each product.

Invesco PowerShares & Source come together

Invesco expands its ability to meet client needs in EMEA and globally by completing its acquisition of Source, a leading independent provider of ETFs . Invesco PowerShares & Source come together

Invesco Ltd. (NYSE: IVZ) announced today that it has completed its acquisition of Source, a leading independent specialist provider of exchange-traded funds (ETFs) with approximately $18 billion of Source-managed assets, plus approximately $8 billion of externally managed assets under management.

The acquisition brings additional talent and a broad array of ETFs that further expand the depth and breadth of Invesco’s active, passive and alternative capabilities and expertise, enhancing the firm’s ability to help clients achieve their investment objectives.

Invesco expands its ability to meet client needs in EMEA and globally by completing its acquisition of Source

The acquisition strengthens Invesco’s ability to meet the needs of institutional and retail clients in EMEA with the addition of dedicated, on-the-ground ETF specialists spanning sales, marketing, capital markets, and product management and development. The combination further expands Invesco’s presence in EMEA while providing additional scale and relevance in the growing ETF market globally.

“Since our announcement earlier this year, we’ve delivered strong investment performance to our clients and strengthened our business momentum while working toward a successful close of the transaction,” said Martin L. Flanagan, president and CEO of Invesco. “The addition of Source’s specialist expertise and product innovation to Invesco’s strong and diversified range of investment capabilities will further enhance our ability to meet the investment needs and outcomes our clients seek.”

“We’re pleased that Mike Paul, who previously served as executive chairman for Source, will assume a new role in Invesco leading our ETF activities in EMEA,” said Andrew Schlossberg, senior managing director and head of EMEA for Invesco. “The addition of Mike and the tremendous talent of Source complements our market-leading PowerShares capability and creates a highly competitive ETF business in the European market. Our focus now is on taking care of clients, further strengthening performance and growing the business from day one of the combination.”

About Invesco Ltd.

Invesco is an independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. NYSE: IVZ; www.invesco.com.

This release may include “forward-looking statements.” Forward-looking statements include information concerning future results of our operations, expenses, earnings, liquidity, cash flow and capital expenditures, industry or market conditions, AUM, acquisitions, debt and our ability to obtain additional financing or make payments, regulatory developments, demand for and pricing of our products and other aspects of our business or general economic conditions. In addition, words such as “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “projects,” “forecasts” and future or conditional verbs such as “will,” “may,” “could,” “should” and “would” as well as any other statement that necessarily depends on future events, are intended to identify forward-looking statements.

Forward-looking statements are not guarantees, and they involve risks, uncertainties and assumptions. There can be no assurance that actual results will not differ materially from our expectations. We caution investors not to rely unduly on any forward-looking statements and urge you to carefully consider the risks described in our most recent Form 10-K and subsequent Forms 10-Q, filed with the Securities and Exchange Commission. You may obtain these reports from the SEC’s Website at www.sec.gov. We expressly disclaim any obligation to update the information in any public disclosure if any forward-looking statement later turns out to be inaccurate.

Source to be acquired by Invesco Limited

Source to be acquired by Invesco Limited. I am delighted to announce that Invesco Ltd, the global independent investment manager and the fourth largest ETF provider globally, has entered into a definitive agreement to acquire Source. The combining of Source with Invesco PowerShares ETFs will further enhance our ability to help clients meet their investment objectives. The fit between Source and Invesco PowerShares is exceptionally complementary in terms of product range, a shared focus on clients and a history of innovation. The combined business will be a true leader in the ETF market across Europe and its target markets.

Subject to regulatory approval, we expect the acquisition to complete in Q3 2017, and whilst we will now begin planning for our combined organisation, we remain focussed on our clients and new product innovation. We will keep you updated with developments as we plan to bring Invesco PowerShares and Source together, and will make information available at www.SourceETF.com over the coming months.

We are very proud to have built Source into one of Europe’s most competitive, and innovative ETF providers and look forward to the many opportunities now afforded by this transformative stage in our development. We look forward to speaking to you directly about this development, but should you have any questions in the meantime then please do not hesitate to contact us.

Best regards,

Mike Paul Executive Chairman

Uncommon truths from Source

Uncommon truths

Oh David, what have you done?

Uncommon truths. ”The UK votes to exit the EU. Cameron resigns” was among our list of 10 ”improbable but possible” events for 2016. Though we had neutralised our UK exposures ahead of the vote, we never really expected it to happen. Nor did the markets judging by Friday’s reaction.

Sterling took it on the chin and UK 10 yr yields fell by nearly 30bps, more than other ”quality” sovereign yields. However, when it came to equity markets, that of the UK was protected by the decline in sterling and the biggest pain was reserved for Japan and the Eurozone. The former suffered due to the ”safe-haven” status of its currency while the latter was hit by fears of contagion, both economic and political.

How we react now depends upon whether we think the markets got it right on Friday or whether there was an over or an under-reaction. In our opinion the direct economic consequences of Brexit will be felt most acutely in the UK, with a smaller negative effect in the rest of the EU and little or no effect in the rest of the world (what the UK loses in export and FDI share will likely go elsewhere, probably within Europe). A dramatic future economic scenario outside the UK relies on political contagion to the rest of the EU bringing an end to the Eurozone and the EU itself.

There are many uncertainties but what we do know can be summarised as: the UK is likely to leave the EU and Scotland appears set to seek independence from the UK; UK politics are in a mess, with a new PM unlikely to be appointed until October, the Labour party tearing itself to shreds, the leaders of the Brexit campaign unprepared for victory and discontent among those who wanted to stay in the EU; there are calls from within a range of other EU countries to hold similar referendums and a number of countries have potential ”trigger” events (today’s election in Spain, Italy’s October constitutional referendum, for example); central banks are now likely to be more accommodative, including the Fed.

The above is a mixed bag but would leave most investors on the cautious side. However, there are some more positive possibilities, which basically consist of the UK and other EU governments making good decisions (including Eurozone fiscal union and a break with austerity). Realistically, central bankers are likely to continue being first line of defence for some time.

Friday provided a good template for what the markets could do under a negative scenario: gold, sovereign debt and defensive equities would outperform.

A more constructive scenario would see the reverse, with ”riskier” bond categories (EM and HY) outperforming along with equity-like assets (especially Japanese and Eurozone equities, along with banks).

Though volatility may remain elevated in the short term, we suspect the markets got it just about right on Friday and do not wish to change our stance at this stage. The world now feels like a riskier place but that has been reflected in prices and volatility indices (the VSTOXX index peaked at 42 on Friday, a level usually seen when a buying opportunity presents itself). We maintain our maximum exposure to cash (it is there for if the markets sink further) and are slightly overweight in equity-like assets. The obvious candidates for purchase at the moment would be Eurozone and Japanese equities but we already have as much of those as we allow ourselves to hold.

Apologies for the late arrival of this and the length of the document. It is a one-off event, we hope!

To download the report click here

Inside this week

Figure 1: UK equities outperform when STG falls
Figure 2: UK savings and bond yields
Figure 3: Asset class returns — A week that finished well for JPY, gold and sovereigns
Figure 4: Equity sector returns — Bad week for banks; good for healthcare and staples
Figure 5: The week ahead — Spanish election results, US ISM, China PMI

Disclaimer

Investors in Source products should note that the value of your investment may go down as well as up. As a result you may not get back the amount of capital you invest.

This document is for discussion purposes only and is intended for institutional investors (professional clients) pursuant to Directive 2004/39/EC (MIFID) Annex II Section I. Without limitation this document does not constitute an offer or a recommendation to enter into any transaction. The calculations and charts set out herein are indicative only, make certain assumptions and no guarantee is given that future performance or results will reflect the information herein. Past performance is not a guarantee of future performance. Simulated performance is not necessarily indicative of future performance. Simulated performance may have many inherent limitations. Performance may be volatile, and an investor could lose all or a substantial portion of his or her investment. When making an investment decision, you should rely solely on the final documentation and any prospectus relating to the transaction and not this information document. Investment strategies involve numerous risks.

The directors of Source UK Services Limited and Source Investment Management Limited (collectively and separately “Source”) do not guarantee the accuracy and/or the completeness of any data included herein and Source shall have no liability for any errors, omissions, or interruptions herein. Source makes no warranty, express or implied, as to the information described herein. All data and performance shown is historical unless otherwise indicated. Investors should consult their own business, tax, legal and accounting advisors with respect to this proposed transaction and they should refrain from entering into a transaction unless they have fully understood the associated risks and have independently determined that the transaction is appropriate for them. In no way should Source be deemed to be holding itself out as a financial adviser or a fiduciary of the recipient hereof and this document is not intended to be ”investment research” as defined in the Handbook of the UK Financial Conduct Authority.

Source, Source’s shareholders, or employees of Source or its shareholders may from time to time have long or short positions in securities, warrants, futures, options, derivatives or financial instruments referred to in this material. As a result, investors should be aware that Source may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single factor in making their investment decision.

This communication is only intended for and will be only distributed to persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

This communication is provided by Source UK Services Limited, 110 Cannon Street, London EC4N 6EU, authorised and regulated by the Financial Conduct Authority.

Source, en av Europas snabbast växande ETF-leverantörer

Source, en av Europas snabbast växande ETF-leverantörer Det finns en rad olika företag som arbetar med olika typer av ETPer på den svenska marknaden. Det finns allt från börshandlade fonder, ETCer och Mini Futures av olika slag. Det är emellertid inte alla dessa produkter som marknadsförs på den svenska marknaden som handlas här. De som handlas i Sverige handlas på endera Nasdaq OMX Nordic eller på NDX. Många av de produkter som erbjuds når aldrig retail marknaden, det vill säga privatkunder. Istället vänder sig många av dessa ETP-utgivare till den institutionella marknaden. I dag berättar vi mer om Source, en av Europas snabbast växande ETF-leverantörer med säte i London. Source är just nu högaktuella sedan företaget den 10 mars 2016 lanserade de första fysiska ETFerna. RAFI Equity Income finns på Legal & Generals plattform, Xetra och London Stock Exchange.

En specialist på börshandlade fonder

Source UK Services Ltd., eller i dagligt tal Source, är ett brittiskt företag som erbjuder börshandlade fonder (ETFer) och Exchange Traded Commodities, det som i dagligt tal brukar benämnas ETCer. Det är egentligen ingen större skillnad mellan en ETF och en ETC utom att en ETC ger en exponering mot råvaror, medan en ETF ger investerarna tillgång till aktier och index. Orsaken till att dessa två produkter har olika namn är enkel. Enskilda råvaruinstrument eller råvarukorgar inte uppfyller de europeiska UCITS-kraven gällande till exempel spridningskravet och faller därför i en annan kategori.

Source lanserade sina första produkter i april 2009 då de började handla med 22 olika ETCer och 13 olika ETFer på Deutsche Börse. Source har i dag mer än 90 olika börshandlade produkter listade på börser runt om i Europa. Bland produkterna finns ETFer med fokus på både avseende aktier, räntebärande produkter, råvaror och alternativa investeringar. Source UK Services Ltd, som står under den brittiska finansinspektionens, FSAs, tillsyn, har sedan starten 2009 vuxit kraftigt. Source har i dag närmare 20 miljarder dollar under förvaltning i sina börshandlade produkter. Den totala omsättningen sedan starten i april 2009 ligger på nästan 600 miljarder dollar.

Vilka är då Source?

Source startades en gång av fem av världens största finanshus, BofA Merrill Lynch, Goldman Sachs, J.P. Morgan, Morgan Stanley och japanska Nomura. Under 2014 kom private equity företaget Warburg Pincus att köpa in sig med 51 procent. I samband med detta kom också Lee Kranefuss, mannen som ibland kallas för ETF-branschens Gudfader att bli Executive Chairman. Att Kranefuss har detta smeknamn är inte så pass konstigt, han var med och lade grunden till Barclays iShares ETFer.

Source har emellertid valt att inte agera på egen hand, istället arbetar företaget med en rad partners som Legal and General Investment Management, MAN Group och PIMCO. Tillsammans kan dessa företag erbjuda de innovativa finansiella produkter som placerarna efterfrågar. Source har dessutom samarbeten med ett stort antal market makers som garanterar likviditeten i deras börshandlade fonder, till exempel Virtu Financial, Flow Traders, Jane Street, Knight Capital, Citigroup, ABN Amro. Dessutom finns market makers som Baader Bank, Banca IMI, Bluefin Europe. Även BNP, Commerzbank, Credit Suisse, DekaBank, Exane, HSBC, IMC, Natixis, Newedge, RBS och UniCredit. Det betyder att det alltid går att köpa och sälja företagets ETFer på marknaden till priser som speglar de underliggande tillgångarnas värde.

Många markets makers

Samarbetet med de många markets makers är ett medvetet och långsiktigt drag från Source sida. Företaget strävar efter att bli en katalysator för likviditet på i första hand den europeiska ETF-marknaden eftersom ledningen anser att likviditeten är den viktigaste källan till att marknaden för börshandlade fonder skall kunna växa ytterligare i Europa. I USA uppgår den dagliga handeln för börshandlade fonder cirka 70 miljarder dollar, eller cirka tio (10) procent av den förvaltade volymen (AUM). I Europa är motsvarande siffra cirka två (2) miljarder dollar eller en procent av det förvaltade kapitalet. Source har i dagsläget inga produkter listade på någon av de svenska börserna, men det går att handla dessa ETPer med hjälp av Nordnet eller Avanza, i första hand på Deutsche Börse. Source har även ett stort antal produkter listade på Londonbörsen och den schweiziska börsen.

Begränsad motpartsrisk

Efter den så kallade Finanskrisen 2008 när den amerikanska investmentbanken Lehman Brothers kollapsade och försäkringsbolaget AIG med nöd och näppe undvek samma öde har kreditrisker och motpartsrisker kommit att bli allt viktigare när en investerare väljer mellan olika placeringsalternativ. Source, som grundades just i samband med Finanskrisen har valt agera efter egna, strängare regler när det gäller sina motparter. De är strängare än vad som föreskrivs av de europeiska UCITS-reglementet. Enligt Sources interna regelverk får bolaget inte ha en exponering mot derivat mot en av sina motparter som överstiger 4,5 procent, mindre än hälften av den tioprocentiga nivån som stipuleras i UCITS III. När det gäller Sources råvaruprodukter, så kallade ETCer, använder företaget amerikanska statsskuldväxlar, G-7 obligationer och kontanter som säkerheter, vilket sannolikt gör att Sources ETC har den mest stabila motpartsstrukturen i branschen.

Sources målsättning

Source har som mål att förnya och effektivisera ETF industrin på alla fronter, oavsett om det rör sig om att ta fram nya effektiva ETFer. Source vill ge investerarna tillgång till nya tillgångsklasser eller att tillsammans med indexleverantörer ta fram mer effektiva produkter baserade på optimerade index.

Source hävdar självt att företaget uppnår en bättre avkastning åt sina kunder genom användandet av derivat. Något som garanterar inte bara en mycket robust motpartsriskstruktur, men också en stramare indexspårning. Baserat på externa analyser har Source rätt eftersom bolagets börshandlade produkter har ett erkänt rykte om att ha en väldigt låg tracking error.

Olika indexleverantörer

I många fall Source har arbetat med indexleverantörer för att kunna erbjuda ETF investerare produkter som presterar bättre än konkurrerande produkter. Av dessa är det mest anmärkningsvärda partnerskapet Source med STOXX att skapa optimerade sektorindex. I juli 2009 inledde Source ett samarbete med indexleverantören STOXX, för att lansera en rad optimerade sektorindex. Dessa nya index skiljer sig i grunden från de befintliga indexen genom att tre olika filter och urvalskriterier adderades. De tre olika urvalskriterierna är likviditet, möjlighet att kunna blanka innehaven samt ägarkoncentrationen. Marknaden tog genast till sig detta och Source fick snabbt en mycket stor marknadsandel för dessa ETFer samtidigt som handelsvolymerna sköt i höjden och sexfaldigades.

I dag arbetar Source mycket med core benchmark, produkter som ger en rak replikering, men också många smart beta produkter. Båda dessa typer av produkter är efterfrågade av investerare världen över. Deet är därför Source gått i bräschen för att lansera det kunderna efterfrågat. Notera att Source till skillnad från många andra leverantör av börshandlade fonder inte valt att arbeta uteslutande med fysisk eller syntetisk replikering. Istället har företaget valt en mix för att erbjuda kostnadseffektiva lösningar för sina kunder.