Brian Chappatta, Columnist

Invesco Gambles That It Pays to Be Active

Its merger with OppenheimerFunds offers a way around the Vanguards of the world, but investors have reason to worry. Plus there’s a muni bond twist.

October 18, 2018 at 4:07 PM UTC

By Brian Chappatta

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Opposites attract, at least in muni bonds.
Photographer: Michael Nagle/Bloomberg

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Invesco Ltd.’s decision to buy OppenheimerFunds from Massachusetts Mutual Life Insurance Co. proves that opposites attract — at least when it comes to strategies in the $3.9 trillion U.S. municipal-bond market.

First, the rationale for the $5.7 billion transaction: Active management is losing out to passive, low-fee indexing products, and the remaining stock and bond pickers need to consolidate to stay afloat. Invesco’s deal, which is expected to close in the second quarter of 2019, is supposed to yield about $475 million in cost-savings over two years. It’s the latest move by the Atlanta-based company, which earlier this year closed a $1.2 billion acquisition of exchange-traded funds from Guggenheim Partners. OppenheimerFunds has large stock funds that invest globally and in the emerging markets.