AI Overview
Whether you should vote "yes" or "no" on the
Invesco QQQ proxy vote depends on your priorities as an investor, as there are both potential benefits and drawbacks to the proposal.
The vote concerns a proposal by Invesco to convert the QQQ ETF from its current structure as a unit investment trust (UIT) to a modern, open-ended exchange-traded fund structure (an "open-end fund").
Arguments to Vote "Yes"
Voting "yes" is widely supported by proxy advisory firms and Invesco itself, which argues the conversion is a modernization step that provides several benefits.
• Lower Expense Ratio: The fund's expense ratio would decrease by 10%, from 0.20% to 0.18%.
• Operational Flexibility: The new structure would grant the fund greater operational flexibility, such as the ability to lend securities and engage in more efficient portfolio management, which could slightly enhance returns.
• Enhanced Governance: The change would replace the current trustee with an independent board of trustees, potentially improving oversight.
• Stop the Calls/Mail: Invesco has been aggressively soliciting votes because non-votes legally count as "no" votes, and they need a majority of all shares to approve the change. Voting can end the communications.
Arguments to Vote "No"
Some investors have raised concerns, arguing the primary beneficiary is Invesco's profitability, not the individual investor, and that the fee reduction is minimal.
• Bigger Win for Invesco: The new structure would allow Invesco to collect direct management fees for the first time, potentially adding hundreds of millions in annual revenue for the company.
• Minimal Investor Savings: The 10% fee reduction is seen by some as an insufficient share of the total savings/profits generated by the structural change (some sources estimate the split as 25% to investors, 75% to Invesco).
• Conflict of Interest: Some feel that the new structure creates potential for conflicts of interest, as Invesco would have more discretion over how expenses are managed.
• Better Alternatives Exist: The QQQM ETF, also offered by Invesco, tracks the same index with an even lower expense ratio of 0.15%.
Summary
The change will not impact QQQ's investment strategy, holdings, or tax characteristics. It is an administrative change that modernizes the fund's legal structure, offering minor benefits to shareholders and substantial new revenue potential for Invesco.
Ultimately, the decision to vote "yes" or "no" is a personal one based on how you weigh these factors. You can vote by following the instructions provided in the communications you received from Invesco or your brokerage.
