PowerShares Expands S&P 500 ETF Range

The fund tracks the S&P 500 VEQTOR Index at 0.39 percent fees

Editor, etf.com Europe
Reviewed by: Rachael Revesz
Edited by: Rachael Revesz

Invesco PowerShares has launched the first exchange traded fund (ETF) in Europe to track the S&P 500 VEQTOR Index, which aims to provide long-only access to U.S. equities while minimising volatility.

The PowerShares S&P 500 VEQTOR UCITS ETF (SPVG) has ongoing fees of 0.39 percent and is physically replicated. It is designed to track the U.S. market while minimising volatility by replicating the S&P VIX Short-Term Futures Index, which tends to act inversely to the equity market, according to a note from the provider.

If the index loses more than 2 percent in five business days, the ETF will employ a “stop loss” mechanism, where the entire allocation moves to cash or cash equivalents until losses are reduced. Depending on how volatile the market is, up to 40 percent of the fund can be invested in VIX futures.

Past returns show that the underlying index generated 6.6 percent over five years and 5.1 percent over three years, slipping short of the S&P 500’s 15.8 percent and 18.9 percent respectively.

Bryon Lake, Head of Invesco PowerShares, EMEA, said today in a statement: “Investors are looking for intuitive solutions which allow them to refine their exposure in key markets, like U.S. equities. The challenge is to both generate returns while at the same time reduce downside risk.”

In May the provider launched a High Dividend Low Vol fund that offers investors exposure to the least volatile stocks that generate the highest income from the S&P 500 for 0.30 percent annual fees.

Rachael Revesz joined etf.com in August 2013 as staff writer. Previously an investment reporter at Citywire, she has a background in writing content for retail financial advisors and has covered a wide range of subjects in finance. Revesz studied journalism at PMA Media, which has since merged with the Press Association. She also holds a B.A. in modern languages from Durham University, as well as CF1 and CF2 financial planning certificates from the CII.