Invesco Is Crushing Barclays And WisdomTree In Currency ETF Space

| About: Invesco Ltd. (IVZ)

Summary

Invesco's PowerShares dominate the currency ETF space w/highest AUM. Invesco also has the 2nd highest fees in the currency ETF category.

At current AUM, Invesco has the potential to collect over $9.6 Million in fee revenue at current fee rate.

Invesco is also trading at attractive 12.34 P/E (cheaper than BlackRock, WisdomTree, Charles Schwab, and more) and boasts a 3.64% dividend yield.

WisdomTree is a dominating force in Emerging Market currency ETFs.

Barclays' currency ETF offerings are struggling to attract AUM, doubtfully breaking even.

Introduction

The FX Metrix research team wanted to break down the ETF industry by asset class, and publish a series of articles detailing and analyzing the major players dominating each asset class. We chose the asset class that our firm focuses on first, which also happens to have the fewest number of sponsors. With only 7 sponsors in the space, currency ETF sponsorship is dominated by only a handful of firms. In our two tables below, we evaluated the ETF sponsors by 6 different metrics:

  • Number of Currency ETFs
  • Number of ETF Offerings Overall
  • Total AUM in Currency ETFs
  • Average AUM per Currency ETF
  • AUM Weighted Average Fee (%)
  • Estimated Fees Collected @ Current AUM

Sponsor Company

Currency ETF Marketing Name

Currency ETF Offerings

Total ETF Offerings

Currency ETF Total AUM (000's)

Avg. AUM Per Currency Offering (000's)

Guggenheim (Private)

CurrencyShares

9

76

$1,101,560

$122,395.55

Barclays (BCS)

iPath

7

90

$12,534

$1,790.57

WisdomTree (WETF)

WisdomTree

6

85

$370,898

$61,816.33

ProShares (Private)

ProShares

6

150

$793,701

$132,283.50

Van Eck (Private)

Market Vectors

4

65

$76,686

$19,171.50

Invesco PowerShares (IVZ)

PowerShares

3

163

$1,204,792

$401,597.33

Allianz SE (AZSEY)

PIMCO

1

150

$14,569

$14,569.00

Number of Currency ETF Offerings

Based purely on number of currency offerings, Guggenheim takes #1. However upon further analysis, we see that this is the only metrics that Guggenheim has placed as #1. Offering a lot of choices is a way for Guggenheim to cast a large net to gain AUM, however they only ranked #2 based on total AUM in currency ETFs.

Number of ETF Offerings Overall

Out of all 7 ETF sponsors we compared above, Invesco's Ltd. (NYSE:IVZ) ETF sponsorship under the name PowerShares takes #1 for having 163 ETF offerings overall. It is second only to BlackRock's (NYSE:BLK) iShares with 309 in the overall ETF industry in terms of total number of ETF offerings. Since BLK currently has 0 offerings in the currency space, they were excluded from our comparison.

Total AUM in Currency ETFs

IVZ also takes #1 currency ETF issuer based on AUM with over $1.2 Billion in total AUM in their currency ETFs.

Average AUM per Currency ETF

Offering only 3 choices in the space leads to IVZ also ranking #1 for average AUM per currency ETF. It is important to note, that this is skewed so high based on their most popular offering: the PowerShares DB USD Bull ETF (NYSEARCA:UUP). UUP also happens to be the largest currency ETF by AUM with over $1.1 Billion.

Fees

Currencies compared to any other asset class, have the fewest number of firms competing to offer unique and innovative ETF products. This can lead to higher fees, and less innovation. Shown below is a table comparing the 7 sponsors by fee-based metrics. Based on current AUM and the AUM weighted average fee for each sponsor, we estimated potential revenues attributable to currency ETFs for the firms.

Company

AUM Weighted Avg. Fee (%)

Currency ETF AUM

Est. Annual Fees Collected @ Current AUM

ProShares

0.9370%

$793,701,000

$7,437,327.90

Invesco

0.8000%

$1,204,792,000

$9,638,336.00

Allianz

0.6500%

$14,569,000

$94,698.50

Van Eck

0.6236%

$76,686,000

$478,224.00

Barclays

0.6071%

$12,534,000

$76,095.10

WisdomTree

0.4942%

$370,898,000

$1,833,093.00

Guggenheim

0.4000%

$1,101,560,000

$4,406,240.00

Based on these estimates, IVZ stands to earn over $9.6 million in fees off of the currency ETF category alone. Another interesting point to note is that even though Guggenheim ranks #2 by currency ETF AUM above, they will collect roughly $ 3 million less in fees than ProShares which has far less in AUM. This is all due to a higher average fee imposed by ProShares. These are the types of high fees that can be brought about by a lack of competition within an asset class.

Dogs of the Currency ETF Space

Expected powerhouses such as Barclays with 7 currency offerings out of an overall 90 ETFs, end up showing its weakness in this asset class presence when evaluated by AUM metrics, as well as fee-based metrics.

Additionally, long standing mutual fund advisor PIMCO, [subsidiary of Allianz SE], is on the bottom in terms of offerings in this space with 1 offering in the currency ETF category. On a stronger note however, PIMCO boasts an additional 14 offerings in the fixed income category for a total of 15 ETF offerings overall.

Conclusion

While some of the sponsors compared above have stronger rankings in other asset classes, the currency landscape seems to be dominated by IVZ and Guggenheim, with WisdomTree being another sponsor worth noting for three reasons.

  • Due to an impressive (also median) 6 offerings in the space.
  • WETF has the 4th highest expected fees based on current AUM.
  • WETF has a dominance of the emerging markets currency offerings. WETF emerging markets currency ETF offerings include: the WisdomTree Emerging Currency ETF (NYSEARCA:CEW), the WisdomTree Indian Rupee Strategy Fund (NYSEARCA:ICN), the WisdomTree Commodity Currency ETF (NYSEARCA:CCX), the WisdomTree Brazilian Real ETF (NYSEARCA:BZF) and the WisdomTree Chinese Yuan ETF (NYSEARCA:CYB).

Data provided by ETFdb.com's ETF database.

Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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