The annual Oscar awards for the ETF industry were held last
week and the big winner was a unique product from Invesco
The associate editors of the Journal of Indexing chose the
winner of several awards in the world of ETFs and indexing.
The 2013 William F. Sharpe Award for ETF Product of the Year
went to the PowerShares Senior Loan Portfolio ETF (NYSE:
). This is the equivalent of winner best movie of the year at the
Oscars. The ETF was the first floating-rate senior loan ETF in
the market and is now the largest with over $6.2 billion in
assets under management.
The ETF was recognized as the ETF vehicle that has had the
biggest impact on the industry over the last 12 months. The ETF
tracks an index that invests in the largest institutional
leverage loans based on market weighting, spreads, and interest
payments. A monthly dividend payment that equates to a 30-day SEC
yield of 4.14 percent make the ETF an attractive investment
option for income investors.
Fed Tapers, ETFs On The Move (SPY, GLD, TLT,
Because the ETF invests in floating rate loans, a rise in
interest rates will not have the same negative affect as they
will on government and corporate bonds. That being said, 2013 was
not a great year for BKLN based on performance versus the
equities market. The ETF is currently down 0.7 percent, not
including the dividends. When compared to other fixed income
products, BKLN does stand out as one of the few ETFs not to
suffer big losses this year.
The other big winner for Invesco was the PowerShares S&P
500 Hedged Portfolio ETF (NYSE:
). The ETF is an actively managed fund that attempts to achieve
positive returns in both bull and bear markets without tracking
the overall stock or fixed income market. The strategy to achieve
such returns includes investments in equities with an implied
volatility hedge and dynamically allocating between equity,
volatility, and cash.
The ETF has achieved its goal of a positive return with a gain
of 10.5 percent in 2013. The only issue is that it is less than
half the return of the S&P 500. Over time, PHDG should
outperform the market if it can achieve its goal, but the ETF
will underperform during strong bull markets. The expense ratio
is a reasonable 0.39 percent and the 30-day SEC yield is 1.38
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
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