December 1, 2010

PowerShares to Launch 4 New KBW Financial ETFs

The four financial-sector exchange-traded funds should begin trading Thursday

ETF-provider Invesco PowerShares plans to roll out four new exchange-traded funds on Thursday based on indexes developed by Keefe, Bruyette & Woods, an investment bank focusing on the financial sector.

The PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY) is based on the KBW Premium Yield Equity REIT Index.

KBWY will invest at least 90%of its assets in securities that comprise this underlying index, which is constructed by KBW using a dividend yield-weighted methodology that aims to reflect the performance of about 30 small- and mid-cap U.S. REITs.

The PowerShares KBW High Dividend Yield Financial Portfolio (KBWD) is based on the KBW Financial Sector Dividend Yield Index.

This index is constructed by KBW using a dividend yield-weighted methodology that seeks to reflect the performance of roughly 39 publicly listed U.S. companies in the business of providing financial services and products, including banking, insurance and diversified financial services. The index may also include securities of business development companies (BDCs) and equity and mortgage REITs.

The PowerShares KBW International Financial Portfolio (KBWX) is based on the KBW Global ex-U.S. Financial Sector Index. The fund’s underlying index is currently comprised mainly of American Depository Receipts (or ADRs).

This index aims to replicate the performance of some 60 non-U.S. financial companies.

The PowerShares KBW Property & Casualty Insurance Portfolio (KBWP) is based on the KBW Property & Casualty Index that seeks to reflect the performance of about 24 property and casualty insurance companies.

PowerShares now has more than 125 ETFs in its product lineup, including five equity-income ETFs, 40 sector/industry exchange-traded funds and the popular PowerShares QQQ (QQQQ) that tracks the Nasdaq 100.

The QQQQ is up about 20% year to date vs. 15% for the SPDR Gold Trust ETF (GLD).

Financial ETF Performance

ETFs focusing on this sector are having a tough 2010.

The Financial Select Sector SPDR (XLF), for instance, is flat year to date, as is the iShares Dow Jones U.S. Financial Sector (IYF).

The iShare Dow Jones U.S. Broker-Dealers ETF is down about 5% through November 30, while the iShares S&P Global Financials (IXG) is off 10%.

The Vanguard Financials ETF (VFH), though, is up about 5%. Its top holdings include JP Morgan, Bank of America and Wells Fargo. 

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