New mutual funds provide broader access to innovative ETFs
TORONTO, Sept. 9, 2013 /CNW/ - PowerShares Canada celebrated the recent launch of two new mutual funds by ringing the opening bell at the Toronto Stock Exchange this morning.
PowerShares Canadian Low Volatility Index Class and PowerShares U.S. Low Volatility Index Fund ("the Funds") provide investors with exposure to portfolios of equities that are less volatile than the broad indices.
"A low-volatility portfolio of equities may offer a better way for long-term investors to own equities, regardless of their risk tolerance," said Michael Cooke, Head of Distribution, PowerShares Canada. "This investment approach has historically resulted in higher relative performance compared to cap-weighted indices over the long term."
Conventional market wisdom dictates that investors seeking higher returns must accept more risk. But academic research has shown that low volatility investing can provide superior risk-adjusted returns over the long term.
Historically, lower volatility stocks have outperformed broad indices in declining markets, while also participating in stock market rallies. Low volatility strategies have also offered higher dividend yields than broad equity market benchmarks.
"Equity investors may want to consider a low volatility as a long-term investment strategy, rather than simply a 'trade' during risk-off periods in equity markets," said Cooke.
PowerShares Canada revolutionized the investment industry in 2009 by providing investors access to a powerful lineup of exchange-traded funds (ETFs) through an innovative suite of mutual funds. PowerShares Funds combine many of the key features of ETFs with those of mutual funds offered in Canada.
PowerShares Canadian Low Volatility Index Class provides investors with exposure to the S&P/TSX Composite Low Volatility Index by investing primarily in securities of PowerShares S&P/TSX Composite Low Volatility Index ETF (TSX: TLV). The Fund is structured as a class within Invesco Corporate Class Inc.
PowerShares U.S. Low Volatility Index Fund provides investors with exposure to the S&P 500® Low Volatility Index (CAD Hedged) by investing primarily in securities of PowerShares S&P 500 Low Volatility (CAD Hedged) Index ETF (TSX: ULV).
Both underlying indices are provided by S&P Dow Jones Indices.
The S&P/TSX Composite Low Volatility Index is designed to measure the performance of the 50 least volatile stocks in the S&P/TSX Composite Index. Volatility is defined as the standard deviation of the security's daily price returns over the prior 252 trading days. Constituents are weighted relative to the inverse of their corresponding volatility, with the least volatile stocks receiving the highest weights.
The S&P 500® Low Volatility Index (CAD Hedged) is designed to replicate the returns of the S&P 500® Low Volatility Index (the "Underlying Index"), with all or substantially all of the direct U.S.-dollar exposure of the Underlying Index hedged back to the Canadian dollar. The Underlying Index is designed to measure the performance of the 100 least volatile stocks in the S&P 500® Index. Volatility is defined as the standard deviation of the security's daily price returns over the prior 252 trading days. Constituents are weighted relative to the inverse of their corresponding volatility, with the least volatile stocks receiving the highest weights. The Index hedges its beginning-of-period balances of its U.S.-dollar exposure back to the Canadian dollar by using rolling one-month forward contracts. Daily hedge returns are computed by interpolating between the spot price and the forward price.
To learn more about PowerShares Canada, please visit www.powershares.ca.
About Invesco Canada Ltd.
Invesco Canada Ltd., operating under three distinct yet complementary product brands (Trimark, Invesco and PowerShares), is one of Canada's largest investment management companies. A subsidiary of Invesco Ltd., Invesco Canada's singular focus is on investment management, offering a diversified suite of investment solutions to institutions, organizations, companies and individual investors across Canada and around the world. Additional information is available at www.invesco.ca.
About Invesco Ltd.
Invesco Ltd. is a leading independent global investment management firm, dedicated to helping investors worldwide achieve their financial objectives. By delivering the combined power of our distinctive investment management capabilities, Invesco provides a wide range of investment strategies and vehicles to our clients around the world. Operating in more than 20 countries, the firm is listed on the New York Stock Exchange under the symbol IVZ. Additional information is available at www.invesco.com.
Commissions, management fees and expenses may all be associated with investments in mutual funds and exchange-traded funds (ETFs). Trailing commissions may be associated with investments in mutual funds. Mutual funds and ETFs are not guaranteed, their values change frequently and past performance may not be repeated. There are risks involved with investing in mutual funds and ETFs. Please read the prospectus for a complete description of risks relevant to the mutual fund or ETF. Copies are available from Invesco Canada Ltd. at www.powershares.ca.
Ordinary brokerage commissions apply to purchases and sales of ETF units.
Most PowerShares ETFs seek to replicate, before fees and expenses, the performance of the applicable index, and are not actively managed. This means that the sub-advisor will not attempt to take defensive positions in declining markets and the ETF will continue to provide exposure to each of the securities in the index regardless of whether the financial condition of one or more issuers of securities in the index deteriorates. In contrast, if a PowerShares ETF is actively managed, then the sub-advisor has discretion to adjust that PowerShares ETF's holdings in accordance with the ETF's investment objectives and strategies.
ETFs are not diversified investments.
PowerShares Canada is a registered business name of Invesco Canada Ltd.
This piece was produced by Invesco Canada Ltd.
Invesco® and all associated trademarks are trademarks of Invesco Holding Company Limited, used under licence. PowerShares®, Leading the Intelligent ETF Revolution® and all associated trademarks are trademarks of Invesco PowerShares Capital Management LLC (Invesco PowerShares), used under licence.
© Invesco Canada Ltd., 2013
SOURCE: Invesco Canada Ltd.
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Vice President, Corporate Affairs