Invesco PowerShares, the Wheaton, Ill.-based firm behind the worldâs biggest Nasdaq 100 ETF, filed paperwork with the Securities and Exchange Commission to market an actively managed futures-based commodities ETF that seeks to achieve positive total returns in different markets by shifting its holdings using a "quantitative rules-based strategy."
The PowerShares Commodity Rotation Portfolio will use a relative strength methodology to rank 25 to 30 single-commodity indexes, and then select a subset of commodities that have what the filing called âpowerful relative strength characteristics.â The âlong-onlyâ strategy will use a single contract from each index, and each selected holding will be "modified equal weighted," the filing also noted.
PowerShares is putting the fund into registration at a time of heightened investor interest in commodities investing, in part because demand for all sorts of materials has been on the upswing in the past 15 years due to emerging markets growth. Also, commodities returns havenât historically been correlated with those on equities and fixed-income investments, which PowerShares noted in the filing.
PowerShares already markets the biggest broad-based commodities ETF by assets on the market. The PowerShares DB Commodity Index Tracking Fund (NYSEArca:DBC), which uses a rules-based indexing strategy, has gathered $5.67 billion since it came to market almost six years ago.
PowerShares said the new fund will generally invest at least 80 percent of its assets, plus the amount of any borrowing for investment purposes, in commodity-related instruments. The fund will seek to gain its exposure in part through a unit organized in Cayman Islands, PowerShares said in the filing.
It noted that the fundâs investments in that Cayman Islands unit canât exceed 25 percent of the portfolioâs total assets at each quarter-end of the fundâs fiscal year.
The filing didnât specifically mention which set of specific commodities the fund might target.
PowerShares also didnât specify a proposed ticker or annual expense ratio.
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