Following the launch of the first US actively-managed exchange-traded fund by Bear Stearns on March 25, Invesco PowerShares has launched the industry’s first three actively managed equity
Following the launch of the first US actively-managed exchange-traded fund by Bear Stearns on March 25, Invesco PowerShares has launched the industry’s first three actively managed equity ETFs, as well as an active fixed-income ETF, on NYSE Arca.
‘PowerShares is honoured to participate in ushering in the actively managed ETF revolution, the most significant industry event since its inception 15 years ago,’ says president and chief executive Bruce Bond.
‘We believe the advent of actively-managed ETFs has the potential to change the way people invest in the future, altering the investing landscape as we know it today. The introduction of active ETFs further amplifies PowerShares’ ongoing commitment to providing investment advisers with innovative financial excellence.’
Despite the problems that led to its acquisition by JPMorgan last month and a week’s postponement of the launch, Bear Stearns won the race to unveil the first actively-managed ETF with the American Stock Exchange-listed Bear Stearns Current Yield Fund, which invests in money-market instruments. Vanguard, Firsthand Funds and ETF Consultants have also filed with the Securities and Exchange Commission to launch active ETFs.
‘The introduction of active equity ETFs represents a milestone for Invesco and for the investment management industry,’ says Invesco president and chief executive Martin L. Flanagan. ‘It enables us to provide clients [with] access to our comprehensive, high-quality investment management capabilities through the convenience of an ETF.’
The PowerShares Active Low Duration Fund and PowerShares Active Mega Cap Fund will be managed by Invesco, while the PowerShares Active AlphaQ Fund and PowerShares Active Alpha Multi-Cap Fund will be sub-advised by Rye Beach, New Hampshire-based AER Advisors, which specialises in the product development of actively managed ETFs.
Invesco PowerShares offers more than 100 US, international and active exchange-traded funds and has assets under management of USD12.75bn. As required by the SEC, all the portfolio holdings of the active ETFs are disclosed daily on the firm’s web site.
The PowerShares Active Low Duration Fund invests in a portfolio of US government, corporate and agency debt securities selected by the Invesco world-wide fixed income team and seeks to outperform its benchmark, the Lehman Brothers 1-3 Year U.S. Treasury Index, by applying an actively managed, top-down portfolio construction and bottom-up security selection total return strategy. The fund’s effective duration is estimated to be the range of zero to three years. Brendan Gau and Scot Johnson are portfolio managers for the fund, whose unitary fee will be 0.29 per cent.
The PowerShares Active Mega Cap Fund seeks to provide long-term capital growth by investing primarily in the equity of mega-capitalisation companies according to an approach developed by Invesco Quantitative Strategies. The methodology seeks to outperform its benchmark, the Russell Top 200 Index, by employing a systematic approach to portfolio management that includes quantitative models based on fundamental and technical evaluations and an optimisation process that seeks to effectively manage relative risk.
Jeremy S. Lefkowitz is lead manager of the portfolio management team at Invesco Quantitative Strategies, which has managed equity strategies for more than 23 years using an active research-based stock selection process with careful risk management. Central to the investment process is a proprietary stock selection model designed consistently to capture alpha through the systematic application of financial indicators and behavioural concepts. The fund’s unitary fee will be 0.75 per cent.
The PowerShares Active AlphaQ Fund seeks to provide long-term capital appreciation by investing in a portfolio of around 50 equities listed on the Nasdaq Global Market, according to a proprietary stock screening methodology developed by AER Advisors, and seeks to outperform the Nasdaq 100 index, while the PowerShares Active Alpha Multi-Cap Fund uses the AER methodology with the aim of beating the S&P 500 index.
David J. O’Leary, who has more than 35 years of investment industry experience, will serve as lead portfolio manager to the Active Alpha funds, which are based on a flexible universe of more than 3,000 US exchange-listed stocks and seek to outperform traditional ETFs by using proprietary research methods, and by measuring money flows and fundamentals from current public data. The funds’ unitary fee will be 0.75 per cent.
