ETF Watch: PowerShares Plans 2 Smart Beta Funds

May 15, 2017

Invesco PowerShares has filed for two separate ETFs that will offer a smart-beta twist on popular market-cap-weighted benchmarks. The PowerShares Russell 1000 Enhanced Equal Weight Portfolio and the PowerShares S&P 500 Minimum Volatility Portfolio will both target the large-cap space.

The Russell 1000 fund will rank the components of the Russell 1000 on value and then on momentum. For each factor, it will screen out the bottom decile of stocks and then equal-weight the remaining components. Essentially, the fund will look to expose investors to the value, momentum and size factors.

Limiting Overall Volatility

The S&P 500 fund’s index methodology will reweight the components of the parent index so that lower-volatility stocks receive heavier weights and higher-volatility stocks receive lower weights to limit the overall volatility of the portfolio, the prospectus said.

The firm already offers the PowerShares S&P 500 Low Volatility Portfolio (SPLV), which has a similar goal. However, unlike the fund outlined in the filing, SPLV offers a more concentrated volatility-weighted portfolio that only includes the 100 least-volatile stocks in the S&P 500 Index. SPLV, which launched in 2011, has been hugely successful and currently has $6.7 billion in assets under management.

The filings did not include tickers or expense ratios, but they did indicate both funds will list on the Bats exchange. ETF.com is owned by Bats; parent company, CBOE.

Contact Heather Bell at [email protected].

 

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