From the December 2006 issue of Research Magazine • Subscribe!

December 1, 2006

PowerShares Captures the Qubes

Nasdaq Global Funds (a subsidiary of the Nasdaq Stock Market) has agreed to transfer sponsorship of the Nasdaq-100 ETF (Nasdaq: QQQQ), Nasdaq-100 European Tracker (EQQQ) and the four BLDRs Index Funds Trust to PowerShares Capital Management.

With almost $20 billion held in the six funds, the agreement is nothing short of colossal. The Nasdaq-100 (Nasdaq: QQQQ) is the most actively traded ETF in the United States, tracking 100 of the largest non-financial companies listed on Nasdaq Stock Exchange. If the deal goes through, PowerShares will triple its asset base (which came to $6.4 billion at the end of the third quarter).

Under the terms of the arrangement, PowerShares will use its distribution network, courtesy of parent company Amvescap, to market the Nasdaq funds to financial advisors and investors. Without this Amvescap affiliation, the Nasdaq sponsorship deal may have not been possible: After being acquired, PowerShares' distribution of its own funds ramped up substantially.

According to reports, Nasdaq had been trying to sell the sponsorship of its funds over the past several years. After swinging the bat a few times and having no agreement to show for it, the right deal finally came along.

"PowerShares has a strong track record of providing compelling portfolios and investment tools for advisers and investors," explains John Jacobs, CEO of Nasdaq Global Funds. "The addition of these successful investment products to PowerShares' family of exchange-traded funds underscores their commitment to sound portfolio construction and investment management approaches. This decision is another important step to elevate Nasdaq's growing and significant leadership in the equification of America."

Nasdaq plans to continue its involvement in industry affairs by focusing on listing ETFs and developing new indexes of its own and with partners. Among the firm's other closely watched indexes are the Nasdaq Clean Edge U.S. Index and the Nasdaq Biotechnology Index.

Sponsorships of the funds will be conveyed to PowerShares pending approval from the Securities and Exchange Commission (SEC) and other regulators.

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