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Invesco PowerShares to close fundamentals-based FTSE Rafi ETF range

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Invesco PowerShares Capital Management has announced that it plans to close 19 of its exchange-traded funds, which represent less than one per cent of its total assets.

Invesco PowerShares Capital Management has announced that it plans to close 19 of its exchange-traded funds, which represent less than one per cent of its total assets.

The PowerShares product line includes 135 unique portfolios with assets of USD25.8bn as of 31 March 2009. The family of ETFs spans numerous market segments, sizes, styles, themes and security types, both domestic and international.

“After carefully evaluating numerous factors including shareholder considerations, length of time on the market, asset levels and the potential for future growth, we proposed closing certain portfolios that have not gained sufficient acceptance with investors,” says Bruce Bond, president and chief executive of Invesco PowerShares. “We remain fully committed to the ETF industry and expect to offer new, exciting products in the months ahead.”

At a meeting on 1 May, the PowerShares funds board of trustees approved the closings. The final day of trading on the Nasdaq and NYSE Arca markets for the affected ETFs will be 18 May.

In early May 2009, the funds will begin the process of closing down and liquidating their respective portfolios. This process will cause each fund’s holdings to deviate from the securities included in its underlying index and each fund to increase its cash holdings, which may lead to increased tracking error. Effective 19 May 2009, the funds will be closed to new investors.

Shareholders may sell their holdings prior to 19 May and may incur typical transaction fees from their broker-dealer. Shareholders of record on the close of business on 18 May will receive cash equal to the amount of the net asset value of their shares as of 22 May, which will include any capital gains and dividends, in the cash portion of their brokerage accounts. Shareholders will generally recognise a capital gain or loss equal to the amount received for their shares over their adjusted basis in such shares.

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