Daily ETF Watch: ‘LadderRite’ Fund Lists

September 10, 2014

Invesco PowerShares launches laddered-strategy corporate bond ETF.

Invesco PowerShares is rolling out a laddered-strategy bond fund that is a sort of follow-up to an ETF the firm launched several years ago.

The PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI) targets investment-grade corporate bonds with five years or less remaining to their maturity, according to its prospectus. It tracks an index from the Nasdaq OMX group that mimics a laddered investment strategy and covers bonds issued by developed-market-domiciled companies and denominated in U.S. dollars. Components also must be fixed-rate bonds and have at least $500 million in debt outstanding at the time of issuance.

The underlying benchmark implements the laddering by grouping component bonds by the year in which they mature and equal-weighting the five resulting groups.

PowerShares issued the first—and, until today, only—laddered bond ETF back in 2007. The PowerShares 1-30 Laddered Treasury Portfolio (PLW | B-56) follows a similar strategy to LDRI, but applies it to 30 years’ worth of U.S. Treasury issues. While not a runaway success, the fund has managed to accumulate more than $265 million in assets under management.

Do-it-yourself laddering strategies are also possible with today’s ETF universe. Both Guggenheim and iShares have families of target-year-maturity bond ETFs, in which each fund invests in a group of bonds maturing during a particular year. Investors can use those to create customized laddered bond portfolios.

However, LDRI and PLW make sense for investors who want to implement a less labor-intensive approach. LDRI comes with an expense ratio of 0.22 percent; PLW charges 0.25 percent.

FTSE Rolls Out Frontier Markets Indexes
Global index provider FTSE has launched the FTSE Frontier Markets Index Series, which will capture the performance of large-, mid- and small-cap securities from frontier markets and will complement the provider’s existing developed and emerging market indexes.

The new Frontier Markets index series covers 26 countries defined as frontier by FTSE’s country classification process and will include 368 constituents. Companies are screened for free float and liquidity, ensuring the indices are relevant to international investors. The series can be segmented by size, region, country and industry sector, and is built to FTSE’s world-class standards of index design.

“The FTSE Frontier Markets Index Series will provide investors with a comprehensive range of international markets benchmarks. As investment strategies continue to become more global, FTSE’s new series helps market participants to manage Frontier exposure with products based on our strong governance and transparency,” said Marc De Luise, director of Index Research at FTSE Group.

 

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