Invesco subsidiary PowerShares Capital Management has announced the launch of three exchange-traded funds on the London Stock Exchange on November 12, the first ETFs the group has launched
Invesco subsidiary PowerShares Capital Management has announced the launch of three exchange-traded funds on the London Stock Exchange on November 12, the first ETFs the group has launched in Europe. The initial range of three ETFs includes a fund providing access to clean energy investments, the PowerShares Global Clean Energy Fund.
‘We are thrilled to be offering our first ETFs outside the US,’ says PowerShares Capital Management president Bruce Bond. ‘The ETF market in Europe has grown by over 60 per cent a year since 2004, but we see further tremendous opportunities as investors look for a more intelligent approach to ETFs.’
Tim Mitchell, head of investing institutions for specialist funds at Invesco Perpetual, says: ‘In contrast to other ETFs, Invesco PowerShares’ ETFs are based on fundamentally-weighted indices and use rules-based quantitative analysis to evaluate and select securities using a wide variety of investment value determinants such as fundamental growth, stock valuation, timeliness and risk factors.’
‘Long before there was heightened interest in water and clean energy investments PowerShares has been providing investors in the US with access to these themes through ETFs,’ Bond says.
‘We believe that the PowerShares Global Clean Energy Fund and the PowerShares Global Water Funds, the latter of which will be launched on the London Stock Exchange at a later date, will give European investors intelligent access to global clean energy and water markets.’
The other ETFs to be launched next week are the PowerShares Dynamic US Market Fund and the PowerShares FTSE RAFI US 1000 Fund. The Dynamic US Market Fund seeks to replicate, before fees and expenses, the Dynamic Market Intellidex Index, comprising US stocks from each sector identified as having the greatest capital appreciation pursuant to a proprietary Amex Intellidex methodology.
The FTSE RAFI US 1000 Fund is a fundamentals-based ETF based on the FTSE RAFI US 1000 Index developed by US firm Research Associates in collaboration with index provider FTSE.
The index is designed to track the performance of the largest US equities, selected on the basis of four fundamental measures of firm size, book value, cash flow, sales and dividends. The 1,000 equities with the highest fundamental strength are weighted by their fundamental scores. The fundamentally-weighted portfolio is rebalanced and reconstituted annually.
The Global Clean Energy Fund is based on the WilderHill New Energy Global Innovation Index, which seeks to deliver capital appreciation and is composed of companies that focus on greener and generally renewable sources of energy and technologies facilitating cleaner energy.
Invesco PowerShares ETFs are classified into one of three categories depending on the objective and characteristics of its underlying index. Its Intelligent Index range seeks to provide alpha by identifying stocks with the greatest investment merit. Because their objective is to maximise performance, Intelligent Indices may look different from traditional market indices.
For investors looking for more market-like exposure, Invesco PowerShares offers a line-up of Intelligent Exposure ETFs that seek to provide accurate exposure to the economy but are constructed using more sophisticated techniques than traditional benchmark indices, which typically use a weighting structure based on market capitalisation. The FTSE RAFI indices assign individual company weights by determining the size of the economic contribution of each company based on book value, cash flow, dividends and sales.
Without targeted investment products, certain market segments such as currency or nanotechnology may be difficult for investors to access. These segments are the focus of Intelligent Access ETFs based on indices offering exposure to specialised or previously uncovered themes.
PowerShares Capital Management offers a family of more than 90 US and international exchange-traded funds, with assets of nearly USD35bn at the end of October. PowerShares is part of Invesco, which operates principally through the AIM, AIM Trimark, Atlantic Trust, Invesco, Invesco Perpetual, Invesco PowerShares and WL Ross & Co brands.