New products introduced over the last week include Brown Brothers Harriman’s new ETF Connect suite of products specific to ETFs and Wasatch launched its new Emerging Markets Select Fund.
In addition, the Power Dividend Index was launched by W.E. Donoghue together with Standard & Poor’s and Euro Pacific Capital introduced market-linked CD offerings, and PowerShares is praised for a low-volatility ETF.
Here are the latest developments of interest to advisors:
1) PowerShares Wins Sharpe Award for Volatility-Focused ETF
Invesco PowerShares Capital Management, which recently dropped fees for some of its ETFs, said its PowerShares S&P 500 Low Volatility Portfolio (SPLV) recently received the William F. Sharpe Award for ETF Product of the Year. Listed on May 5, 2011, SPLV represents the first and largest low-volatility weighted ETF available to US investors, according to the ETF provider. The ETF recently surpassed $3 billion in assets under management.
This year’s award was presented at the 2012 Global Indexing & ETFs Conference held in Phoenix in early December. SPLV was recognized as ETF Product of the Year for having the most significant impact on the ETF market over the previous 12 months.
This is the second consecutive year a PowerShares ETF has received this prestigious award, following the PowerShares Fundamental High Yield Corporate Bond Portfolio (PHB) as the 2011 recipient.
Since inception through November 30, 2012, the PowerShares S&P 500 Low Volatility Portfolio had a total return including dividends of 18.31% vs. a total return of 9.91% for the S&P 500 Index, and it has done so with about 30% less volatility, according to the ETF provider.
2) Wasatch Launches Emerging Markets Select Fund
Wasatch Advisors, the investment manager to the Wasatch Funds, announced Thursday the launch of the Wasatch Emerging Markets Select Fund (WAESX). This no-load mutual fund invests in a select portfolio of 30 to 50 geographically diversified emerging-markets companies of all sizes and is managed by Ajay Krishnan. He is joined by veteran international manager Roger Edgley, director of international research at Wasatch Advisors.
While WAESX can invest in stocks of all sizes, many of the companies are likely to be those that have “graduated” beyond small-cap size. Krishnan said of the strategy, “We generally seek countries with attractively valued stock markets and growing consumer economies driven by domestic (home-country) demand and an expanding middle class.” He added, “Unlike many emerging-markets funds, we aren’t as heavily weighted in countries such as China, Korea and Taiwan. Instead, we usually try to uncover attractively priced companies whose fortunes are based on local economies rather than on exports to foreign countries.”
3) W.E. Donoghue Launches the Power Dividend Index with S & P
W.E. Donoghue & Co., Inc., in partnership with S & P and S-Networks, announced the launch of the Power Dividend Index (PWRDXTR). This pure yield index isolates the top 50 dividend-paying stocks from the S & P 500 Index, equally weights them across the 10 GIC sectors, rebalances quarterly and provides a tactical overlay to reduce exposure during a major market decline. As global markets reset, PWRDXTR adapts and improves a traditional investment strategy to deliver the potential for a better risk-adjusted return.
The Power Dividend Index Portfolio tracks W.E. Donoghue’s Power Dividend Index, which is calculated by Standard and Poor’s Custom Indexes and is predicated on the SDOGX Index of 50 stocks derived from the S&P 500 Index. The strategy uses a tactical overlay to determine a bullish or defensive posture. In a bullish posture, the index methodology selects the five stocks, equally weighted, in each of the ten GICS sectors that make up the S&P 500 that offer the highest dividend yields as of the last trading day of November. Technical indicators will shift the strategy to a defensive position, should market conditions warrant, and when in a defensive position the index will be invested in 90 day T-bills.
4) Euro Pacific Capital Introduces Market-Linked CD Offerings
Investors who wish to protect principal while still maintaining some exposure to the markets can now choose Euro Pacific Capital’s market-linked certificates of deposit (MLCDs). MLCDs, new in 2012, offer principal protection when held to maturity, with up to $250,000 insured by the FDIC. They also offer potential returns based on the performance of various market measures, such as gold, silver, equities, commodities, or a basket of foreign currencies.
MLCDs offer the opportunity to participate in upside performance of an underlying market measure, subject to the terms of each specific MLCD. They are available for a minimum investment of $25,000 and increments of $1,000 thereafter, and the estate feature allows for redemption of the full principal amount at par, without interest, upon death or the adjudication of incompetence of the beneficial owner under certain circumstances, subject to the terms of the specific MLCD.
Three MLCDs are being offered for the month of December. The first tracks a basket of 10 commodity indices; the second, a proprietary long/short commodity strategy; and the third tracks a basket of the four BRIC currencies (Brazil, Russia, India and China). They are open through investment through the third week of December. Other new products will be available on a monthly basis.
5) Brown Brothers Harriman Launches ETF Connect Suite
Brown Brothers Harriman (BBH) has announced the launch of its new suite of ETF-specific products, ETF Connect, where ETF sponsors, authorized participants (APs), and administrator and custodian BBH can manage ETF operations through a single platform. Through ETF Connect, users have the ability to access new and enhanced ETF products including the recently launched APEX (AP Exchange).
APEX, specifically built for ETFs, provides workflow automation based on client specified creation/redemption order requirements that take place between the ETF sponsor, APs and BBH. Further, the tool supports custom baskets, as well as restricted securities at time of order placement. APEX is fully integrated with BBH’s global custody, accounting and transfer agency (TA) systems to enable streamlined and efficient processing of transactions.
Read the Dec. 7 Portfolio Products Roundup at AdvisorOne.