In today’s environment, yield is among the first factors that advisors look for when choosing incomeDynamic (Income) alternative options for their clients. Risk management is another.
That’s why PowerShares Canada launched two smart beta ETFs on the TSX today. Both funds offer diversified sources of yield, currency exposure, and a laddered bond strategy that helps reduce interest rate risk, Michael Cooke, head of distribution, told advisor.ca at this morning’s launch.
“For the more conservative investor, [the funds] preserve the quality of the overall portfolio — not exposing them to too much credit or interest rate risk,” adds Cooke.
The launch was months in the making, as the firm worked to close the initial offerings. “It’s a fast evolving industry. There are regulatory and market conditions, and you’re reliant on both internal and external stakeoholders to get these to market,” he says.
The funds are:
PowerShares 1-3 Year Laddered Floating Rate Note Index ETF (PFL). The fund seeks to replicate, before fees and expenses, the performance of the FTSE TMX Canada One to Three Year Laddered Floating Rate Note Index. The index is designed to give investors exposure to a laddered basket of Canadian government and corporate investment-grade floating-rate notes. PFL has a management fee of 0.20%.
PowerShares LadderRite U.S. 0-5 Year Corporate Bond Index ETF (USB/USB.U). It seeks to replicate, before fees and expenses, the performance of the NASDAQ LadderRite Zero to Five-Year USD Corporate Bond Index. That index is designed to give investors exposure to a laddered basket of U.S.-dollar-denominated, investment-grade corporate bonds. USB has a management fee of 0.25%. The ticker symbol “USB” represents Canadian-dollar-denominated units, while “USB.U” represents U.S.-dollar-denominated units.
“For that investor that holds U.S. cash and wants exposure to U.S. dollar assets, this is a very efficient and low-cost way to get that exposure,” adds Cooke.
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