Invesco PowerShares Capital Management LLC, a leading global
provider of exchange-traded funds (ETFs), announced today the
launch of the PowerShares Fundamental Emerging Markets Local Debt
Portfolio (PFEM) on the NYSE Arca.
PFEM is designed to provide investors fundamentals-weighted
exposure to emerging market sovereign debt denominated in local
currencies. The Fund has an expense ratio of 0.50% and is expected
to issue monthly distributions.
"Emerging market sovereign debt represents an attractive asset
class potentially offering investors higher yields and lower debt
to GDP ratios relative to most developed markets," said Andrew
Schlossberg, head of US distribution & global ETFs. "Consistent
with our leadership position in providing a value-added approach,
the PowerShares Fundamental Emerging Markets Local Debt Portfolio
(PFEM) is the first ETF to provide investors a
fundamentals-weighted exposure to emerging market sovereign debt
denominated in local currencies."
Traditional bond indexes generally use some form of market-cap
weighting where constituent weights are a function of both the
amount of debt issued and the debt's current price. This approach
can result in greater weights being assigned to issuers that have
issued more debt. In contrast, the Fundamental Index® approach
developed by Research Affiliates, LLC weights bonds based on each
country's economic footprint, resulting in a portfolio that is
correlated to a country's debt service capacity.
"Weighting by fundamentals gives higher portfolio weights to
issuers with lower leverage and better debt service capacity,
resulting in generally lower credit risk compared to the cap-weight
benchmark," said Shane Shepherd, senior vice president and head of
fixed-income research at Research Affiliates, LLC. "In addition, a
regular rebalance back to fundamental weights takes advantage of
potential market inefficiencies in credit spreads by buying cheaper
bonds and selling more expensive ones," Mr. Shepherd said.
"The PowerShares Fundamental Emerging Markets Local Debt
Portfolio (PFEM) expands our Fundamentals Weighted fixed-income
lineup which currently includes ETFs targeting the High Yield (PHB)
and Investment Grade Corporate (PFIG) markets," added Lorraine
Wang, Invesco PowerShares senior vice president of new product
development. "We believe the PowerShares suite of Fundamentals
Weighted fixed-income ETFs provides investors an attractive
alternative to cap-weighted strategies."
- PowerShares Fundamental Emerging Markets Local
Debt Portfolio (PFEM)
- PowerShares Fundamental High
Yield® Corporate
Bond Portfolio (PHB)
- PowerShares Fundamental Investment Grade
Corporate Bond Portfolio (PFIG)
The PowerShares Fundamental Emerging Markets
Local Debt Portfolio (PFEM) is based on the Citi RAFI Bonds
Sovereign Emerging Markets Extended Local Currency Index (Index).
The Fund generally will invest at least 80% of its total assets in
bonds that comprise the Index. The Index measures the potential
return of a portfolio of bonds issued by the national governments
of 18 emerging market countries, all in the respective local
currency. To qualify for the Index, countries must have at least a
minimum domestic sovereign debt rating of "CC" by S&P and "Ca"
by Moody's. Research Affiliates, LLC and Citigroup Index LLC
jointly select the emerging market countries in the Index and
country weights are determined once per year based on the RAFI
methodology. The Fund and the Index are rebalanced quarterly.
As of April 30, 2013, the Index included bonds issued by the
national governments of Brazil, Chile, China (Offshore), Colombia,
the Czech Republic, Hungary, Indonesia, Israel, Malaysia, Mexico,
Peru, the Philippines, Poland, Russia, South Africa, South Korea,
Thailand and Turkey.
A credit rating is an assessment provided by a nationally
recognized statistical rating organization (NRSRO) of the
creditworthiness of an issuer with respect to debt obligations,
including specific securities, money market instruments or other
debts. Ratings are measured on a scale that generally ranges from
AAA (highest) to D (lowest); ratings are subject to change without
notice. NR indicates the debtor was not rated, and should not be
interpreted as indicating low quality. For more information on
rating methodologies, please visit the following NRSRO websites:
www.standardandpoors.com and select 'Understanding Ratings' under
Rating Resources on the homepage; www.moodys.com and select 'Rating
Methodologies' under Research and Ratings on the homepage.
Invesco PowerShares Capital Management LLC is Leading the
Intelligent ETF Revolution® through its family of more than 140
domestic and international exchange-traded funds, which seek to
outperform traditional benchmark indexes while providing advisors
and investors access to an innovative array of focused investment
opportunities. With franchise assets over $77 billion as of March
31, 2013, PowerShares ETFs trade on both US stock exchanges. For
more information, please visit us at invescopowershares.com or
follow us on Twitter @PowerShares.
Invesco, Ltd. Is a leading independent global investment
management firm, dedicated to helping investors worldwide achieve
their financial objectives. By delivering the combined power of our
distinctive investment management capabilities, Invesco provides a
wide range of investment strategies and vehicles to our retail,
institutional and high net worth clients around the world.
Operating in more than 20 countries, the firm is listed on the New
York Stock Exchange under the symbol IVZ. Additional information is
available at www.invesco.com.
There are risks involved with investing in ETFs, including
possible loss of money. Shares are not actively managed and are
subject to risks including those regarding short selling and margin
maintenance requirements. Ordinary brokerage commissions apply.
Investments in fixed-income securities, such as notes and bonds,
carry interest rate and credit risk. Interest rate risk refers to
the risk that bond prices generally fall as interest rates rise and
vice versa. Credit risk is the risk of loss on an investment due to
the deterioration of an issuer's financial health.
Sovereign debt securities are subject to the additional risk
that -- under some political, diplomatic, social or economic
circumstances -- some developing countries that issue lower quality
debt securities may be unable or unwilling to make principal or
interest payments as they come due. The fund may have limited legal
recourse against the issuer and/or guarantor of sovereign debt when
default occurs. As a holder of government debt, the Fund may be
requested to participate in the rescheduling of such debt and to
extend further loans to government debtors.
Government obligors in emerging market countries are among the
world's largest debtors to commercial banks, other governments,
international financial organizations and other financial
institutions. The Fund invests in the bonds of governments located
in emerging market countries and much of the income received by the
Fund will be in foreign currencies.
Much of the income received by the Fund will be in foreign
currencies. Because the Fund's net asset value (NAV) is determined
in US dollars, the Fund's NAV could decline if the currency of the
non-US markets in which the Fund invests depreciate against the US
dollar.
The Fund may invest in non-investment grade, or high-yield,
securities (junk bonds). High-yield securities have additional
risks, including interest rate changes, decreased market liquidity
and a larger amount of outstanding debt than investment grade
securities.
There are additional risks involved in writing (selling) covered
call options. The Fund, by writing covered call options on this
Index, will give up the opportunity to benefit from potential
increases in the value of the index stocks above the exercise
prices of the options, but will continue to bear the risk of
declines in the value of the Index.
The Fund will invest in foreign bonds and, because foreign
exchanges may be open on days when the Fund does not price its
shares, the value of the non- U.S. securities in the Fund's
portfolio may change on days when you will not be able to purchase
or sell your Shares.
The Fund's use of a representative sampling approach will result
in its holding a smaller number of securities than are in the
underlying Index, and may be subject to greater volatility.
The Fund currently intends to effect creations and redemptions
principally for cash, rather than principally in-kind because of
the nature of the Fund's investments. As such, investments in the
Fund may be less tax efficient than investments in ETFs that create
and redeem in-kind.
The Fund is considered non-diversified and may be subject to
greater risks than a diversified fund.
Shares are not individually redeemable and owners of the shares
may acquire those shares from the Fund and tender those shares for
redemption to the Fund in Creation Unit aggregations only,
typically consisting of 100,000 shares.
Shares are not FDIC insured, may lose value and
have no bank guarantee.
PowerShares® is a registered trademark of Invesco PowerShares
Capital Management LLC (Invesco PowerShares). Invesco PowerShares
and Invesco Distributors, Inc. are indirect, wholly owned
subsidiaries of Invesco Ltd. Invesco Distributors, Inc. is the
distributor of the PowerShares Exchange-Traded Fund Trust II.
Citi and Citi and Arc Design are trademarks and service marks of
Citigroup Inc. or its affiliates and are used and registered
throughout the world. The Yield Book is a registered service mark
of The Yield Book Inc. and is registered in the U.S. and other
countries. The trade names Fundamental Index®, RAFI®, the RAFI
logo, and the Research Affiliates corporate name and logo are the
exclusive intellectual property of Research Affiliates, LLC and are
registered trademarks in the U.S. and other countries. Any use of
Research Affiliates, LLC's trade names and logos without the prior
written permission of Research Affiliates, LLC is expressly
prohibited and Research Affiliates, LLC reserves the right to take
any and all necessary action to preserve all of its rights, title
and interest in and to these marks. Fundamental Index®, the
non-capitalization method for creating and weighting of an index of
securities, is patented and patent-pending proprietary intellectual
property of Research Affiliates, LLC.
An investor should consider the Fund's
investment objective, risks, charges and expenses carefully before
investing. For this and more complete information about the Fund
call 800 983 0903 or visit invescopowershares.com for a prospectus.
Please read the prospectus carefully before investing.
Note: Not all products available through all firms.
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Media Contacts: Kristin Sadlon Porter Novelli
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