No. 4 ETF issuer Invesco PowerShares, which made its name specifically on not offering plain-vanilla, cap-weighted funds, today is entering into the space it previously eschewed.
The firm is rolling out five cap-weighted funds covering core asset classes and offering them all at rock-bottom prices.
The funds, their tickers and their expense ratios are as follows:
- PowerShares PureBetaSM MSCI USA Portfolio (PBUS), 0.04%
- PowerShares PureBetaSM MSCI USA Small Cap Portfolio (PBSM), 0.06%
- PowerShares PureBetaSM FTSE Developed ex-North America Portfolio (PBDM), 0.07%
- PowerShares PureBetaSM FTSE Emerging Markets Portfolio (PBEE), 0.14%
- PowerShares PureBetaSM 0-5 Yr US TIPS Portfolio (PBTP), 0.07%
PBUS tracks the MSCI USA Index, which contains 634 large- and midcap stocks. PBSM covers the MSCI USA Small Cap Index, which has 1,828 small-cap stocks.
Meanwhile, PBDM and PBEE track the FTSE Developed ex North America Index and the FTSE Emerging Index, respectively. The developed-markets benchmark covers 1,423 stocks from 22 countries, and the emerging market benchmark covers 991 stocks from 23 countries.
PBTP tracks an index from BofA Merrill Lynch.
Although not necessarily the cheapest funds in their respective spaces, the PureBeta ETFs are all very competitively priced, with PBUS, for example, matching the cost of the Vanguard Total Stock Market ETF (VTI), while coming in at only 1 basis point more than similar funds offered by Schwab and iShares.
The move by PowerShares rounds out its offering of funds, allowing its customers to choose plain-vanilla products bearing the same brand name as their smart-beta ETFs.
The launches also come as the firm’s purchase of Guggenheim Investments winds through the acquisition process. Guggenheim, the eighth-largest issuer, is also known for avoiding the plain-vanilla space with its ETFs, so these launches fill a hole in both firms’ lineups.
Despite the popularity and high profile of smart-beta strategies these days, most of the assets flowing into ETFs are going into cap-weighted strategies.
PowerShares has been at the No. 4 spot in terms of assets under management for some time behind BlackRock’s iShares, State Street Global Advisors and Vanguard, and these latest additions could attract significant assets for the firm from both new ETF investors and existing PowerShares clients.
Contact Heather Bell at [email protected]