Eight new PowerShares sector funds hit the market this morning, raising the total number of exchange-traded funds (ETFs) offered by the enhanced indexing pioneer to 19. The launches, though relatively small in size, helped push PowerShares' total assets under management over the $1 billion mark for the first time.
"We are excited to reach the $1 billion in capital under management threshold," said Bruce Bond, CEO of PowerShares Capital Management. "We attracted our first $500 million in assets over a 17-month period since PowerShares launched its first two ETFs in May of 2003. The next $500 million took only five months to achieve.
Like most PowerShares, the new sector funds are based on "Intellidex" indexes created by the American Stock Exchange, which are designed to deliver superior returns to traditional market indexes - and to do so with less volatility. The funds come with an expense ratio of 0.60 percent, and cover the following sectors:
Dynamic Biotechnology & Genome Portfolio - PBE
Dynamic Food & Beverage Portfolio - PBJ
Dynamic Leisure and Entertainment Portfolio - PEJ
Dynamic Media Portfolio - PBS
Dynamic Networking Portfolio - PXQ
Dynamic Pharmaceuticals Portfolio - PJP
Dynamic Semiconductors Portfolio - PSI
Dynamic Software Portfolio - PSJ
A full review of the funds is available here.
Together with its recently launched suite of style funds, the new sector funds will help PowerShares offer a (relatively) complete line of enhanced index ETFs. That should help the company endear itself to the growing market of financial advisors, many of whom need a full suite of products to pursue their favored asset allocation strategies. PowerShares recently hired fifteen full-time salespeople who will focus exclusively on the financial advisor marketplace.
More Funds In the Pipeline, Including New Dividend Indexes
Today's launch marks just the latest milestone in what has been a very busy year for PowerShares. Over the past seven months, the company has debuted 17 new ETFs. And while many of those funds have yet to become truly established in the marketplace, PowerShares is nonetheless pressing on with its ambitious expansion program. Over the next 12 months, the company plans to launch a further twenty ETFs.
Three of the most anticipated product launches will be in the dividend area, already home to PowerShares' most successful fund, the PowerShares High Yield Dividend Achievers Fund (PEY), with assets of $375 million. PEY tracks a index of the fifty highest-yielding stocks with a ten-year history of boosting their dividends.
Like its chief competitor in the dividend ETF marketplace - the $6 billion iShares Dow Jones Select Dividend ETF (DVY) - the PowerShares ETF has been criticized in some quarters for its heavy sector concentration: More than eighty percent of the fund is tied up in Utilities and Financials, the traditional bastions of high-yielding stocks.
For investors looking for more diversified dividend-screened holdings, PowerShares plans to launch a fund tracking all of the publicly-traded U.S. companies with a ten-year history of boosting their dividends - a product akin, in many ways, to the recently launched "Dividend Aristocrats" index from S&P, which includes all the companies in the S&P 500 with a twenty-five year history of boosting dividends.
PowerShares will also launch an index tracking 100 U.S. companies that are raising their dividends quickly, as well as a fourth dividend fund tracking high-yielding foreign companies using American Depository Receipts (ADRs).