Invesco Delays QQQ ETF Conversion Vote to Secure 51% Threshold

Invesco Ltd. has announced it will adjourn the proxy vote to convert its flagship Nasdaq-100-tracking fund QQQ into an open-ended exchange-traded fund (ETF). The decision follows a failure to secure the 51% shareholder approval needed for the change according to reports. The new voting date is set for December 19th as reported.

The $409 billion Invesco QQQ Trust Series 1 currently operates as a unit investment trust, a structure that limits Invesco's revenue from the fund's management fees according to analysis. The proposed conversion would shift the fund's structure to a standard ETF, potentially allowing Invesco to capture a larger share of the fee revenue as financial models show. The asset manager has stated it is "very close to that threshold," with more than 50% of shareholders already voting in favor according to the company.

With more time to gather support, Invesco will now push to secure the remaining shareholder votes. The delay provides an opportunity to rally more investors to back the structural change before the next vote as investors anticipate. The outcome of the adjourned meeting remains a key focal point for investors and market analysts.

Why the Standoff Happened

The structure of QQQ has historically made it a unit investment trust (UIT), a format that predates the modern ETF era according to industry analysis. Under this setup, Invesco receives minimal revenue from the fund's management fees, with most of the income going to the fund's trustee, Bank of New York Mellon, and the index provider, Nasdaq as financial data shows. The fund's expense ratio is 0.20%, and it generates roughly $800 million in annual fee revenue according to financial reports.

By converting QQQ to a standard ETF, Invesco would be able to alter the revenue split and potentially capture a larger portion of the fees. . CFO Allison Dukes previously stated the move could improve net revenue and adjusted operating income by about four basis points, translating to roughly $180 million at current asset levels as financial projections indicate. This financial incentive is a key driver behind the proposal according to analysts.

How Markets Reacted

The news of the adjourned vote sent Invesco shares surging by as much as 4.3% in morning trading on Friday according to market data. The stock had already gained over 30% since the company filed its initial proxy statement in mid-July as trading records show. Investors appear to view the structural change as a potential boost to Invesco's profitability as market sentiment suggests.

While Invesco shares remained unchanged in post-market trading on Thursday, the broader market remains focused on the outcome of the adjourned vote according to financial analysis. Institutional investors have also been active in QQQ in recent quarters, with several large fund managers increasing their holdings as filings indicate. SCS Capital Management LLC and EverSource Wealth Advisors LLC, for instance, both raised their stakes in QQQ as per recent filings.

What This Means for Investors

The conversion of QQQ to an ETF could also have implications for investors holding the fund as financial projections show. If approved, the fund's expense ratio would be reduced from 0.20% to 0.18% according to financial models. This would make QQQ more competitive with other index-tracking products while potentially boosting its net asset value as analysts report.

The adjournment of the vote also highlights the challenges Invesco faces in securing shareholder approval for structural changes as investor data shows. While the firm is confident it can reach the 51% threshold, it now has to maintain investor momentum until the next vote according to company statements. For now, the outcome remains uncertain, but the financial stakes are high for both Invesco and its shareholders.