The stock price of Invesco Ltd. (NYSE: IVZ) saw a significant increase, rising 15.28% to close at $19.92 on Friday. After the business announced that Invesco Capital Management LLC (ICM), its indirect subsidiary, had filed a preliminary proxy statement with the U.S. Securities and Exchange Commission (SEC), the rise ensued.
In order to change the Invesco QQQ TrustSM, Series 1 (QQQ) from a “unit investment trust” to a “management company,” more precisely an “open-end company,” in accordance with the Investment Company Act of 1940, the filing requests investor approval.
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Proposed Overhaul of QQQ’s Operational Structure
If the shareholder proposals receive approval, significant structural changes will be implemented. Notably, The Bank of New York Mellon (BNY), QQQ’s current trustee, will be replaced by a board of individual trustees. BNY would transition to operational roles including custodian, administrator, accounting agent, and transfer agent. Additionally, ICM will assume the role of investment adviser to QQQ through a formal advisory agreement.
Fee Adjustments and Cost Efficiency
The proposed advisory agreement sets forth a unitary management fee of 18 basis points. This represents a 20 basis point decrease from QQQ’s current expenditure ratio, which translates into a pro forma cost savings of 2 basis points for shareholders. All fund-related expenses, including licensing fees, will be covered by the charge.
Nasdaq Verifies the Stability of Partnerships
Nasdaq released a statement acknowledging its knowledge of and participation in Invesco’s shareholder engagement process in response to the regulatory filing. The stock exchange stressed that neither the management of the Nasdaq-100 Index nor the current licensing agreements between Nasdaq and Invesco will be impacted by the proposed reorganization of the QQQ Trust.
In the future, Invesco will pay any related license fees through the unified management fee instead of the Trust directly. For Invesco’s flagship ETF, this structural change represents a significant milestone that positions it for more operational flexibility and suggests an economical approach to asset management that may pay off for long-term investors.
