Invesco PowerShares, the Wheaton, Ill.-based fund sponsor known
for its Nasdaq QQQQ Trust ETF (Nasdaq:QQQQ), filed with the
Securities and Exchange Commission to change indexes underlying
three existing funds and one that it has in the works.
According to its filing, PowerShares is dumping indexes for its
three existing "Target Allocation" funds provided by New Frontier
Advisors, a Boston-based financial data and analytics firm, in
favor of indexes from Ibbotson Associates, a division of
Morningstar; and Riverfront Investment Group, a Richmond, Va.-based
On June 30, the Ibbotson Alternative Completion Portfolio will
replace the Autonomic Growth NFA Global Asset Portfolio
(NYSEArca:PTO); the PowerShares Riverfront Tactical Balanced Growth
Portfolio will replace the Autonomic Balanced Growth NFA Global
Asset Portfolio (
); and the PowerShares Riverfront Tactical Growth & Income
Portfolio will replace the Autonomic Balanced NFA Global Asset
Changes are also afoot in the company's fixed-income lineup.
PowerShares has filed with the SEC to convert its planned High
Yield Corporate Bond Portfolio (NYSEArca:PHB), into a fundamentally
weighted ETF, the PowerShares Fundamental High Yield Corporate Bond
Portfolio, using an index from Research Affiliates, the Newport
Beach, Calif.-based investment manager.
PowerShares didn't disclose when it will bring the High Yield
Corporate Bond ETF to market. The ticker symbol will remain PHB,
and PowerShares plans a management fee of 0.50 percent, the filing
The New High Yield Bond Fund
The new high yield corporate bond ETF will invest at least 80
percent of its total assets in its underlying index's securities,
including U.S. dollar-denominated corporate and high-yield bonds of
5-, 10- and 30-year maturities. If the index concentrates on a
single industry or industry group, the PowerShares fund will invest
25 percent or more of assets in that area.
The RAFI High Yield Bond Index is part of the Research
Affiliates Fundamental Index (
) family of eight indexes, which uses financial fundamentals,
including sales, profits, book value and dividends, to determine
holdings. Fundamentally weighted indexes tend to focus on a few
hundred highly liquid securities, in contrast to the thousands held
by traditional market-capitalization-weighted indexes.
Fundamentally indexed products have been popular recently. The
RAFI indexes last year saw the assets that track them increase 60
percent to $27 billion.
The New Target Allocation Funds
The PowerShares Target Allocation funds are "funds of funds."
Rather than investing in an underlying index composed of individual
securities, all three revamped PowerShares Target Allocation
products will track indexes of ETFs.
The Riverfront Target Balanced Growth Portfolio will hold
approximately 20 percent of its assets in fixed-income funds, with
the remainder in equity funds. The Riverfront Tactical Growth &
Income Portfolio will maintain a 50-50 asset split between equity
and fixed-income funds. The Ibbotson Alternative Completion
Portfolio may include any combination of asset classes, according
to the PowerShares filing.
PowerShares is planning on retaining the three funds' current
ticker symbols and will hold management fees on each of the funds
at 0.25 percent.
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