PowerShares ETF To Target Rising Rates

November 27, 2017

Invesco PowerShares has filed for an ETF designed to emphasize the performance of S&P 500 stocks more sensitive to changes in interest rates than their peers. The PowerShares S&P 500 Rising Rates Portfolio tracks an alternatively weighted version of the S&P 500.

The fund’s underlying index methodology scores each company based on its sensitivity to monthly changes in the yield of the 10-year U.S. Treasury note over the preceding 60 months. Stocks that have higher “positive sensitivity” to changes—meaning that their prices tend to rise along with rates—receive higher weightings, while those that tend to see their prices decline when rates are rising receive lower weightings.

PowerShares already offers the $133 million PowerShares S&P 500 ex-Rate Sensitive Low Volatility ETF (XRLV), which launched in April 2015. XRLV has a similar premise, but weights companies inversely by volatility such that lower-volatility securities have higher weights. The proposed fund will offer purer exposure to the effects of rising interest rates.

The filing did not include a ticker or expense ratio, but did indicate the fund will list on the NYSE Arca.

Contact Heather Bell at [email protected]

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