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PowerShares expands international portfolio with new ETFs

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PowerShares Capital Management has announced a significant expansion in its range of exchange-traded funds with the listing of five new international portfolios on the American Stock Excha

PowerShares Capital Management has announced a significant expansion in its range of exchange-traded funds with the listing of five new international portfolios on the American Stock Exchange at the end of September.

The new funds offer exposure to international indices based on four fundamental measures selected by California-based Research Associates, which has already pioneered the use of fundamental indices in Europe, as well as to an index of listed private equity vehicles.

The PowerShares FTSE RAFI Asia Pacific ex-Japan Small-Mid Portfolio is based on an index that seeks to track the performance of small- and mid-cap companies in the Asia-Pacific region outside Japan. The PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio is based on an index comprising 1,500 small- and mid-cap companies in developed international markets, excluding the US.

The PowerShares FTSE RAFI Emerging Markets Portfolio is based on an index that tracks the performance of the largest emerging market companies, while the PowerShares FTSE RAFI Europe Small-Mid Portfolio tracks the performance of small- and mid-cap equities in ‘old Europe’.

The PowerShares International Listed Private Equity Portfolio seeks to replicate the Red Rocks International Listed Private Equity Index, which comprises a diversified mix of more than 30 internationally listed companies with direct investments in more than 1,000 private global businesses. Constituents for the index are selected based upon reputation, valuation, management, financial data, historical performance and the need for diversification within the index, which is rebalanced quarterly.

‘I am thrilled to announce this great milestone in our global expansion,’ says Bruce Bond, president of PowerShares Capital Management. ‘PowerShares continues to add value and intelligence to exchange-traded funds by providing investors with cutting-edge ways to access new and exciting corners of financial markets around the world.

‘Our international listed private equity portfolio will give US-based investors unique access to a diversified group of companies whose primary business is private equity investments – an important and increasingly sought-after asset class. Our four additional FTSE RAFI portfolios will provide fundamental-weighted exposure to global markets.’

PowerShares’ FTSE RAFI portfolios are based on FTSE RAFI global indices, constructed using four fundamental measures of a firm’s size: book value, cash flow, sales and dividends. The equities with the highest fundamental strength are then weighted according to their fundamental scores. PowerShares’ fundamentals weighted portfolios are rebalanced and reconstituted annually.

Says Rob Arnott, chairman of Research Affiliates: ‘Our research has found that indices weighted by company fundamentals have outperformed the well-known cap-weighted indices in the US by an average 200 basis points per year. In international applications, this benefit surpasses on average 300 basis points.’

PowerShares Capital offers more than 90 US and international exchange-traded funds that seek to outperform traditional benchmark indices while providing advisers and investors with access to an array of investment opportunities. With franchise assets of nearly USD35bn, PowerShares ETFs trade on all three main US stock exchanges and the PowerShares QQQ, which tracks 100 of the Nasdaq’s fastest-growing companies, is the most actively traded equity security in the world.

PowerShares is part of Invesco, an independent global investment manager that serves retail, institutional and private wealth management clients under its AIM, AIM Trimark, Atlantic Trust, Perpetual, PowerShares and WL Ross brands and had approximately USD499bn in assets under management at the end of July.

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