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Top Portfolio Products: New ETFs Adjust for Rising Rates, Fluctuating Currencies

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New products and changes introduced over the last week include the addition of a bond index from Solactive AG; two ETFs from Deutsche Asset & Wealth Management; and Invesco PowerShares added a portfolio.

Also, Nasdaq and KBW announced a strategic index partnership and Envestnet announced a strategic investment in AlphaHedge Capital Partners.

Here are the latest developments of interest to advisors:

1) Invesco PowerShares Launches Portfolio

Invesco PowerShares Capital Management LLC has announced the launch of the PowerShares S&P 500 ex-Rate Sensitive Low Volatility Portfolio (XRLV).

Based on the S&P 500 Low Volatility Rate Response Index, XRLV seeks to offer low volatility equity exposure while seeking protection against rising interest rates.

The index is composed of the 100 constituents of S&P 500that exhibit both low volatility and low interest rate risk. It aims to include stocks exhibiting low volatility characteristics, after removing stocks that historically have performed poorly in rising interest rate environments.

The fund and index will be rebalanced and reconstituted on the third Friday of May, August, November and February. Constituents are weighted relative to the inverse of their volatility, with the least volatile stocks receiving the highest weights.

2) Deutsche Asset & Wealth Management Adds Two ETFs

Deutsche Asset & Wealth Management has announced the launch of two currency-hedged exchange traded funds on its Deutsche X-trackers platform, Deutsche X-trackers Dow Jones Hedged International Real Estate ETF (DBRE) and Deutsche X-trackers S&P Hedged Global Infrastructure ETF (DBIF). Both ETFs aim to mitigate exposure to fluctuations between the value of the U.S. dollar and the currencies of the countries included in the underlying indices.

DBRE aims to provide investors with exposure to the Dow Jones Global ex-U.S. Select Real Estate Securities Total Return Net Index, which seeks to track the performance of publicly traded real estate securities in countries outside the U.S.

DBIF seeks to track the performance of equity securities of infrastructure issuers in developed and emerging markets through the S&P Global Infrastructure Index.

3) Solactive Adds Bond Index

Solactive AG has announced the launch of the Solactive U.S. 7-10 Year Treasury Bond Index, comprised of U.S. Treasuries with a time to maturity of 7 to 10 years. The total return version of the index has been licensed for the Horizons U.S. 7-10 Year Treasury Bond ETF (HTB) listed on the Toronto stock exchange.

The Solactive U.S. 7-10 Year Treasury Bond Index is composed of Treasury bonds and Treasury notes of the U.S. government denominated in U.S. dollars, with a current amount outstanding of at least $250 million U.S. and an effective time to maturity from 7 to 10 years. Inflation-linked bonds, callable bonds, floating rate and local government bonds are excluded from the index. All index components are weighted according to their market value.

4) Nasdaq and KBW Announce Strategic Index Partnership

Nasdaq and Keefe Bruyette & Woods (KBW) have announced a partnership involving KBW’s family of financial indexes. Under the agreement, Nasdaq will assume responsibility for the calculation, dissemination and commercialization of these indexes, and will work closely with KBW to jointly promote the products and benchmarks to new market participants worldwide.

The index family includes: KBW Nasdaq Bank Index (BKX); KBW Nasdaq Regional Banking Index (KRX); KBW Nasdaq Capital Markets Index (KSX); KBW Nasdaq Insurance Index (KIX); KBW Nasdaq Property & Casualty Index (KPX); KBW Nasdaq Premium Yield Eq. REIT Index (KYX); KBW Nasdaq Financial Sector Dividend Yield Index (KDX); KBW Nasdaq Global Financials (ex-U.S.) Index (KGX); and KBW Nasdaq Mortgage Finance Index (MFX).

5) Envestnet Announces Strategic Investment

Envestnet, Inc. has announced a strategic investment in AlphaHedge Capital Partners, LLC, that provides access to long/short equity strategies through separately managed accounts (SMAs). Terms of the transaction, which closed on April 1, were not disclosed.

According to Envestnet, the AlphaHedge SMAs provide transparency, liquidity and lower minimums.

Read the April 5 Portfolio Products Roundup at ThinkAdvisor.


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