PowerShares Switching Indexes On Four Funds


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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 advisory.

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 ( PAO ); and the PowerShares Riverfront Tactical Growth & Income Portfolio will replace the Autonomic Balanced NFA Global Asset Portfolio (NYSEArca:PCA).

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 said.

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 ( RAFI ) 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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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
More Headlines for: PAO , PCA , PHB , PTO , QQQ , RAFI

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