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Invesco PowerShares launches Europe’s first S&P 500 Dynamic Veqtor Index tracking ETF

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Invesco PowerShares is listing the PowerShares S&P 500 VEQTOR UCITS ETF on the London Stock Exchange from 15 June. There will be further listings across selected European countries.

The ETF, which is the first of its kind in Europe, will seek to generate positive returns in rising US equity markets with the intention to partially reduce potential losses in falling markets. It tracks the S&P 500 Dynamic VEQTOR Index, which dynamically allocates long-only exposure between the S&P 500 Index, the S&P VIX Short-Term Futures Index, and cash. This provides broad exposure to the US equity market through the S&P 500 Index, while the S&P 500 VIX Short-Term Futures Index tends to correlate negatively to the performance of the S&P 500 Index. As such, the index seeks to mitigate risk between equity and volatility, while attempting to partially reduce potential losses in volatile markets.
 
The S&P 500 Dynamic VEQTOR Index also incorporates a stop loss mechanism, so if the index losses are 2 per cent or above in the five preceding business days, the entire allocation moves to cash or cash equivalents until losses are no longer at this level.
 
The ETF employs a rules-based strategy designed to provide returns in line with the performance of the S&P 500 VEQTOR Index and will invest in a combination of equity securities in the S&P 500 Index, VIX futures, cash or cash equivalents. The asset allocation within the index is determined by analysing historical and implied market volatility, as well as market performance. The ETF will usually maintain a minimum of 2.5 per cent exposure to VIX futures and, in periods when market uncertainty rises, it can allocate as much as 40 per cent of the portfolio to VIX futures.
 
Bryon Lake, Head of Invesco PowerShares – EMEA, says: “Capital preservation has become an increasingly important and relevant component of investing. We don’t need to look far back to remember how quickly and unexpectedly market volatility can strike in today’s market environment. Investors are looking for intuitive solutions which allow them to refine their exposure in key markets, like US equities. The challenge is to both generate returns while at the same time reduce downside risk. The PowerShares S&P 500 VEQTOR UCITS ETF seeks to manage this challenge by providing many of the characteristics of liquid alternatives and tracking a dynamically managed index which can potentially mitigate high equity market volatility.”
 
Invesco PowerShares plans to list the PowerShares S&P 500 VEQTOR UCITS ETF across the following exchanges:   

Irish Stock Exchange – 11 June
Euronext Paris – 19 June
Deutsche Börse XETRA – 19 June
Borsa Italiana – 19 June
SIX Swiss Exchange – TBC
 

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