Invesco Indexing

Conclusions from Consultation on Proposed Change to the Free Float Eligibility Requirements of the Invesco Indexing Investable Equity Universe

April 26, 2022

On April 25, 2022, Invesco Indexing’s consultation on a proposed change to the free float eligibility requirements of the Invesco Indexing Investable (III) Equity Universe ended. As previously announced, Invesco Indexing sought stakeholder feedback on a potential change that covers situations in which a security may have a large, unadjusted market capitalization, a low free float rate, and yet still have a large float-adjusted market capitalization. Under the existing methodology treatment, these securities would be ineligible for the III Equity Universe.

Having considered stakeholder feedback, Invesco Indexing will be implementing the changes as outlined in the consultation and summarized below:

Invesco Indexing will be implementing free float eligibility criteria that will be applied after the constituents of the III Equity Universe are determined through the application of the complete, existing III Equity Universe methodology. Specifically, if a security meets both of the following criteria, in addition to all other eligibility criteria, it would be added to the list of III Equity Universe constituents:

  1. The company’s market capitalization is greater than or equal to twice the company market capitalization of the smallest security that newly qualified for the Mid Cap size segment as of the most recent June rebalance.
  2. The security’s float-adjusted market capitalization is greater than or equal to the company market capitalization of the smallest security that newly qualified for the Mid Cap size segment as of the most recent June rebalance.

These determinations are made separately for Developed Market and Emerging Market securities.

On a go-forward basis, the supplementary liquidity criteria will be applied during each quarterly rebalance (March, September, December) as well as the annual reconstitution (June) of the III Equity Universe.

This methodology change will be effective with the June 2022 reconstitution of the III Equity Universe.

For any questions, please reach out to a member of the client engagement team at IndexSupport@invesco.com.