PowerShares Canada announced changes to the investment strategy of PowerShares Canadian Preferred Share Index Class (PPS) and PowerShares Canadian Preferred Share Index ETF.
In 2013, The NASDAQ OMX Group, Inc. acquired the index business of Mergent, Inc., including Indxis, which created and maintained the underlying index for both PowerShares Canadian Preferred Share Index Class and PPS. Following the acquisition, NASDAQ reviewed its indices, and announced enhancements to its NASDAQ Select Canadian Preferred ShareTM Index, which is the underlying index of both ETFs.
“We are updating the methodology with a focus on index size and selection, and believe the resulting index with high-yield and low-volatility screens will serve as a better benchmark for the Canadian market,” says Dave Gedeon, managing director, NASDAQ OMX Global Indexes.
The previous index methodology had applied liquidity and market-capitalization screens to narrow the investable universe, from which the 50 most liquid securities were selected for index inclusion.
Effective Thursday, May 1, 2014, the index will include 100 securities, with selection based on the highest combined weight of high yield and low volatility. The new methodology maintains the liquidity screen and continues to weight by market capitalization.
PowerShares Canada also announced it has reduced the management fee on PowerShares FTSE RAFI U.S. Fundamental Index ETF. Effective March 28, 2014, the management fee will be reduced from 60 basis points to 55.