PowerShares Plans Financial ETF Expansion

by on September 8, 2010 | ETFs Mentioned:

PowerShares seems ready to continue the expansion of its product lineup, recently filing for approval on four new funds. Each of the proposed ETFs would seek to replicate indexes maintained by KBW, which is already behind several ETFs offered by State Street. The funds detailed in the recent SEC filing include:

  • KBW Premium Yield Equity REIT Portfolio (KBWY): Linked to the KBW Premium Yield REIT Index, a benchmark constructed using a dividend-weighted methodology.
  • KBW High Dividend Yield Financial Portfolio (KBWD): Linked to the KBW Financial Sector Dividend Yield Index, a dividend yield weighted index that seeks to reflect the performance of approximately 24 to 40 publicly listed financial companies that are principally engaged in the business of providing financial services and products.
  • KBW Global ex-U.S. Financial Sector Portfolio (KBWX): Linked to the KBW Global ex-U.S. Financial Sector Index, a cap-weighted benchmark that will consist of approximately 60 non-U.S. financial companies.
  • KBW Property¬†& Casualty Insurance Portfolio (KBWP): Linked to the KBW Property & Casualty Index, a benchmark that reflects the performance of approximately 24 property and casualty insurance companies.

If these products make it to market, PowerShares could join WisdomTree on the list of ETF issuers offering dividend-weighted products. WisdomTree currently offers a number of ETFs linked to benchmarks that determine components and individual security weightings based on cash dividends paid.

The Global ex-U.S. Financial ETF would compete most directly with a recently-launched iShares product, the MSCI ACWI ex-U.S. Financials Index Fund (AXFN). There are a number of ETFs within the insurance sector, including the SPDR KWB Insurance ETF (KIE) and PowerShares Dynamic Insurance Portfolio (PIC). Already in 2010 PowerShares has added a dozen new ETFs to its lineup, including a suite of small-cap sector-specific funds, a closed end fund ETF (PCEF), and the first international corporate bond ETF (PICB).

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Disclosure: No positions at time of writing.