Since the introduction of the S&P 500 ETF (SPY, A) in January of 1993, the ETF industry has continued to gain popularity, offering investment products in almost every imaginable segment of the global economy. There are more than 1,400 ETF products on the market in the U.S., and almost 50 ETF issuers. Invesco PowerShares is one of those issuers, playing a major role in bringing new ETFs market. Here is a look at the company and some of its most noteworthy ETFs [see also How To Pick The Right ETF Every Time].
Invesco PowerShares: A Major ETF Player
With ETFs listed on multiple exchanges around the world, and with its products owned in more than 130 countries, Invesco is one of the major players in the ETF industry. It offers more than 20 investment categories to choose from, including Large Cap Value Equities, Currencies, Alternative Energy and Real Estate ETFs, just to mention a few. Invesco PowerShares Management LLC was founded in 2003, and as of December 31, 2012 has franchise assets exceeding $70 billion.
Invesco promotes itself as “leading the intelligent ETF revolution,” focusing on creating ETFs that follow a certain methodology or strategy. This is a departure from many traditional ETFs that are passive and simply attempt to track a pre-existing index. According to Invesco, many of its funds seek to select and evaluate securities on multiple criteria, and not just market capitalization, which is a common method for selecting securities within an ETF [also see How To Rescue Your Losing ETF Position With Options].
- Headquartered in Wheaton, IL
- 160 U.S. Listed ETFs
- 0.56% average expense ratio
- 0.2% to 1.01% expense ratio range
(As of May 3, 2013)
Most Popular PowerShares ETFs
Based on assets under management, these are the most popular PowerShares ETFs:
- PowerShares QQQ Trust, Series 1 (QQQ, A) is the firm’s flagship product. It tracks the Nasdaq 100 Index and is composed of the largest 100 nonfinancial companies listed on the Nasdaq Stock Exchange, based on market cap. The ETF has $33 billion in assets, does more than 33M average daily volume and has an expense ratio of 0.20%.
- PowerShares DB Commodity Index Tracking Fund (DBC, A) tracks the DBIQ Optimum Yield Diversified Commodity Index Excess Return, a rule-based index composed of 14 of the most heavily traded physical commodities in the world. The expense ratio is 0.93%, it has $5.7 billion in assets and averages 2.2M shares per day [also see 3 Things You Need To Know When Picking A Commodity ETF].
- PowerShares S&P 500 Low Volatility Portfolio (SPLV, A-) tracks the S&P 500 Low Volatility Index, which consists of the 100 lowest volatility stocks on the S&P 500 over the last 12 months. It has a 0.25% expense ratio, $5.5 billion in assets and averages 2M in average daily volume. It began trading on May 5, 2011.
Most Heavily Traded PowerShares ETFs
Based on the average daily volume, these are the most heavily traded PowerShares ETFs:
|QQQ||PowerShares QQQ Trust||0.20%||33.2M||$33.1B|
|BKLN||PowerShares Senior Loan Portfolio||0.66%||2.8M||$3.8B|
|DBC||PowerShares DB Commodity Index Tracking Fund||0.93%||2.2M||$5.7B|
|SPLV||PowerShares S&P 500 Low Volatility Portfolio||0.25%||2.0M||$5.5B|
|PGX||PowerShares Preferred Portfolio||0.50%||1.1M||$2.6B|
- The PowerShares Senior Loan Portfolio (BKLN, B+) tracks the S&P/LSTA U.S. Leveraged Loan 100 Index, which is meant to track the largest institutional leveraged loans based on interest payments, spreads and market weighting [also see 13 Rapid Fire ETF Ideas For 2013].
- PowerShares Preferred Portfolio (PGX, A) tracks the BofA Merrill Lynch Core Fixed Rate Preferred Securities Index, which is designed to replicate the total return of a diversified group of investment-grade preferred securities.
Cheapest PowerShares ETFs
Based on the expense ratio (ER), these are the cheapest PowerShares ETFs:
|QQQ||PowerShares QQQ Trust||0.20%|
|PFIG||PowerShares Fundamental Investment Grade Corporate Bond Portfolio||0.22%|
|PVI||PowerShares VRDO Tax Free Weekly Portfolio||0.25%|
|IDLV||PowerShares S&P International Developed Low Volatility Portfolio||0.25%|
|SPHB||PowerShares S&P 500 High Beta Portfolio||0.25%|
|IDHB||PowerShares S&P International Developed High Beta Portfolio||0.25%|
|SPLV||PowerShares S&P 500 Low Volatility Portfolio||0.25%|
|PLW||PowerShares 1-30 Treasury Ladder Portfolio||0.25%|
|XSLV||PowerShares S&P SmallCap Low Volatility Portfolio||0.25%|
|XMLV||PowerShares S&P MidCap Low Volatility Portfolio||0.25%|
The average ER of all PowerShares funds is 0.56%, with these funds being the cheapest, and the most expensive being the PowerShares DB Agriculture Fund (DBA, A) with an ER of 1.01%.
Some PowerShares funds have performed very strongly over the last number of years, and deserve mentioning.
The Dynamic Build & Construction ETF (PKB, A) seeks capital appreciation by investing in well researched building and construction companies based on a number of criteria. In 2012, this was one of the top performing funds, up 46.15% [also see 3 Economic Charts Bears Love To Ignore].
Dynamic Media ETF (PBS, B+) has been another strong performer, gaining nearly 30% in 2012. The fund seeks capital appreciation by investing in well researched U.S. media companies based on a number of criteria.
For longer-term performance, the Dynamic Pharmaceuticals ETF (PJP, B) has seen impressive returns over the years. The fund was up 27.5%, 20% and 24.5% in 2010, 2011, and 2012, respectively.
The Bottom Line
Invesco PowerShares is a well established player in the ETF arena, offering a wide range of products to suit nearly any investor. Whether looking at active daily volume, long-term performance, diversification or commission free trading, PowerShares has you covered. Before investing, always make sure the ETF suits your financial situation and goals, and be aware that historical performance is not always indicative of future results
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Disclosure: No positions at time of writing.