PowerShares Index Changes Target Retail Investors

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Invesco PowerShares, the Wheaton, Ill.-based fund sponsor best known for its Nasdaq ETF (NasdaqGM:QQQQ), received approval from the Securities and Exchange Commission to change the indexes underlying five of its funds, in a move designed to improve its product lineup.

The index changes, which took effect today, affect PowerShares' three asset allocation funds that used indexes from New Frontier Advisors and two of its specialized products.

"We wanted to put the funds in a better position to provide investors with the potential for improved risk-adjusted returns and position our family of ETFs for continued growth," Ed McRedmond, an Invesco PowerShares executive in charge of institutional and portfolio strategies, said in a telephone interview.

The changes to the asset allocation funds are as follows:

  • The Ibbotson Alternative Completion Portfolio replaces the Autonomic Growth NFA Global Asset Portfolio (NYSEArca:PTO);
  • The PowerShares Riverfront Tactical Balanced Growth Portfolio replaces the Autonomic Balanced Growth NFA Global Asset Portfolio (NYSEArca:PAO);
  • The PowerShares Riverfront Tactical Growth & Income Portfolio replaces the Autonomic Balanced NFA Global Asset Portfolio (NYSEArca:PCA).

"While a firm like New Frontier [Advisors] has a very strong institutional reputation, in the retail financial adviser community, which the asset allocation funds are designed for, advisers may better recognize RiverFront and Ibbotson," McRedmond said.

The two other index changes are:

  • The S&P 500 High Quality Portfolio replacing the Value Line Timeliness Select Portfolio (NYSEArca:PIV);
  • The Morningstar StockInvestor Core Portfolio replacing the Value Line Industry Rotation Portfolio (NYSEArca:PYH).

PowerShares has only switched underlying indexes on its funds once before, when it expanded the reach of its private equity offering, the Global Listed Private Equity Portfolio (NYSEArca:PSP), to encompass firms outside the U.S. He didn't rule out further index changes for PowerShares down the road.

McRedmond noted that PowerShares filed with the SEC for permission to change the underlying index of its high-yield bond fund, the High Yield Corporate Bond Portfolio (NYSEArca:PHB) from a capitalization-weighted index provided by Wachovia to a fundamental-weighted index from Research Affiliates LLC, the Newport Beach, Calif.-based investment manager.

Invesco PowerShares expects that change to take place once SEC approval is obtained, according to McRedmond.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , ETFs
Referenced Symbols: PAO , PCA , PHB , PIV , PSP , PTO , PYH , QQQ

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