Daily ETF Watch: Low Beta Funds Debut

PowerShares rolls out two equal-weighted portfolios targeting low-beta exposure.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Invesco PowerShares launched two ETFs today that track equal-weighted indexes that highlight low-beta stocks. The PowerShares Russell 1000 Low Beta Equal Weight Portfolio (USLB) and the PowerShares FTSE International Low Beta Equal Weight Portfolio (IDLB) both track indexes that target stocks that exhibit lower beta than the average beta of their respective parent benchmarks.

USLB holds stocks that have a lower degree of price sensitivity or volatility than the average for the Russell 1000 and are components of that index. IDLB does the same with the FTSE Developed ex US Low Beta Equal Weight Index.

USLB comes with an expense ratio of 0.35%, while IDLB charges 0.45%.

Hedging, With A Twist

Two firms, iShares and WisdomTree, have filed for families of currency-hedged ETFs that will shift their degree of hedging according to market conditions.

The three iShares funds will each track cap-weighted MSCI indexes that already underlie other iShares ETFs. The proposed funds will use four equally weighted currency risk indicators—carry, momentum, value and volatility—for each currency to determine how much it should be hedged. Each currency included in the funds can be entirely unhedged or fully hedged, or a hedge of 25%, 50% or 75% can be applied. Hedges will be adjusted on a monthly basis.

The three funds are as follows:

Each fund will invest mainly in their existing unhedged counterpart funds, with currency hedging applied via forward contracts.

Meanwhile, the WisdomTree ETFs will use a similar set of signals to determine the hedging of individual currencies—interest-rate differentials, valuations and relative price momentum—with the hedges ranging from entirely unhedged to fully hedged.

The funds will track dividend-weighted indexes that, as with the iShares funds, underlie existing WisdomTree ETFs, with the hedges applied separately. The funds outlined in the filings include the following:

Neither set of filings includes expense ratios, tickers or exchange listing.


Contact Heather Bell at [email protected].

Heather Bell is a former managing editor of etf.com. She has also held editorial positions at Dow Jones Indexes and Lehman Brothers. Bell is a graduate of Dartmouth college and resides in the Denver area with her two dogs.