Daily ETF Watch: PowerShares Debuts 5 Funds

Four launch on the NYSE Arca, one on the Nasdaq.

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Reviewed by: Heather Bell
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Edited by: Heather Bell

Invesco PowerShares rolled out five funds today. Those included two funds tracking factor-based versions of the S&P 500 index and two currency-hedged low-volatility portfolios that launched on the NYSE Arca as well as a sector-rotation ETF that launched on the Nasdaq.

Meanwhile, UBS rolled out six “Series B” ETNs rather than issuing new shares of some of its existing ETNs. And State Street Global Advisors filed for two more funds that will be managed by Jeffrey Gundlach’s DoubleLine Capital.

PowerShares’ New ETFs

PowerShares added five funds to its lineup today.

The PowerShares S&P 500 Momentum Portfolio (SPMO) and PowerShares S&P 500 Value Portfolio (SPVU) track the top 100 stocks in the S&P 500 in terms of momentum and value scores, respectively. Both funds come with an expense ratio of 0.25 percent.

They join five other ETFs operated by PowerShares that track factor-focused subsets of the S&P 500.

PowerShares also rolled out the PowerShares Developed EuroPacific Currency Hedged Low Volatility Portfolio (FXEP) and the PowerShares Japan Currency Hedged Low Volatility Portfolio (FXJP). Both funds track indexes that cover the least volatile stocks in their parent indexes and then apply a currency hedge via one-month rolling forward contracts.

FXEP’s index is derived from the S&P EPAC ex. Korea LargeMidCap Index, tracking the 200 lowest-volatility stocks in the benchmark. FXJP’s index is based on the S&P Japan 500 Index and covers the 100 least-volatile stocks in that index.

Both funds come with an expense ratio of 0.25 percent.

Finally, PowerShares rolled out the PowerShares DWA Tactical Sector Rotation Portfolio (DWTR) on the Nasdaq. The ETF is a fund-of-funds that tracks the Dorsey Wright Sector 4 Index. Essentially, DWTR can hold a maximum of four other ETFs selected from the nine ETFs in the PowerShares DWA sector Momentum ETF family.

DWTR comes with an expense ratio of 0.75 percent.

6 New UBS ETNs

UBS has opted not to issue new shares (or notes) for 38 of the ETNs that it operates, according to a recent announcement. It’s calling those ETNs “Medium-Term Notes, Series A.” The problem with this is that the prices of the ETNs could deviate from the underlying index values in the future; however, almost all of the ETNs have significant numbers of issued but unsold notes available.

What it looks like UBS will be doing to address the issue is launching “Series B” ETNs that will serve as alternate shares of the ETNs and that will track the exact same indexes. Six of those ETNs rolled out today and include the following:

  • The Etracs Alerian MLP Infrastructure Index ETN Series B (MLPB) tracks the Alerian MLP Infrastructure Index and corresponds with Series A’s MLPI.
  • The Etracs Alerian MLP Index ETN Series B (AMUB) tracks the Alerian MLP Index and corresponds with Series A’s AMU.
  • The Etracs Monthly Pay 2xLeveraged Mortgage REIT ETN Series B (MRRL) tracks the monthly compounded 2x leveraged performance of the Market Vectors Global Mortgage REITs Index and corresponds with Series A’s MORL.
  • The Etracs CMCI Total Return ETN Series B (UCIB) tracks the performance of the Bloomberg CMCI Total Return Index and corresponds with Series A’s (UCI | C-36).
  • The Etracs Linked to the Wells Fargo Business Development Company Index ETN Series B (BDCZ) tracks the Wells Fargo Business Development Company Index and corresponds with Series A’s BDCS.
  • The Etracs 2xLeveraged Long Wells Fargo Business Development Company Index ETN Series B (LBDC) tracks the monthly compounded 2x leveraged performance of the Wells Fargo Business Development Company Index and corresponds with Series A’s BDCL.

The Series B ETNs appear to have a callable feature that differentiates them from the Series A ETNs.

SSgA Plans More DoubleLine Funds

On the back of its success with the $1.2 billion SPDR DoubleLine Total Return Tactical ETF (TOTL), State Street Global Advisors has filed for two more funds that will be subadvised by DoubleLine Capital. The SPDR DoubleLine Short Term Total Return Tactical ETF and the SPDR DoubleLine Emerging Markets Fixed Income ETF will both be actively managed fixed-income funds.

However, only the short-term bond fund will include DoubleLine CEO Jeffrey Gundlach among its portfolio managers. It was big news when Gundlach, one of the most successful fixed-income managers trading today, was announced as a portfolio manager for TOTL; his contribution to the fund has no doubt helped boost its assets over the $1 billion mark in the less than eight months since its launch.

The short-term bond ETF will invest in a wide range of fixed-income securities. The prospectus states that it will invest up to 25 percent of its total portfolio in mortgage-backed securities; it can invest up to 20 percent of its assets in junk bonds and up to another 15 percent in bonds denominated in non-U.S. currencies. There is no similar limit on foreign-issued debt denominated in U.S. dollars, according to the prospectus.

The ETF will target an average weighted duration range of one to three years. It will use a top-down method to make allocation decisions at the sector level, and a bottom-up method to select individual securities, seeking to achieve excess returns while controlling the fund’s risk level, the prospectus said.

Meanwhile, the emerging market bond fund will take a wide view of what qualifies as “emerging.” Basically if a country is classified as emerging or developing in an index or by a supranational organization, its fixed-income securities are eligible for inclusion in the ETF. However, no single country should have a weight exceeding 20 percent, and no more than 20 percent of the fund should be invested in noninvestment-grade securities, the prospectus said.

The fund can invest in a wide range of fixed-income vehicles issued by emerging market corporations and governments, and it will make its investment decisions based on the managers’ analysis of various internal political, market and economic criteria, the prospectus said. The ETF will target a weighted average effective duration between two and eight years.

The filings did not include tickers, expense ratios or listing exchanges.


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.