DOWNERS GROVE, Ill.,
Sept. 22, 2016 /PRNewswire/
-- Invesco PowerShares Capital Management, LLC, a leading
global provider of exchange-traded funds (ETFs), announced today
the launch of PowerShares Variable Rate Investment Grade Portfolio
(VRIG). The ETF will be actively managed by IFI, which
collectively has more than 34 years of experience in fixed income
investing.
With global interest rates at historical lows due to fiscal
stimulus, VRIG offers investors a fixed income alternative that may
benefit from rising short term rates. Rather than trying to time
when interest rates may rise, the ETF seeks to be defensively
positioned for higher short term rates, providing investors with
the opportunity for current income.
"With structural money market reform coming in October, we are
pleased to be adding VRIG to our ETF lineup of variable rate
products, said Dan Draper, Global
Head of PowerShares. "Companies across the U.S. have not
experienced real rate increases for years, but with Libor rising
they may have to pay higher rates on their loans while new money
market rules could also slow demand for short-term debt."
The addition of VRIG expands PowerShares industry leadership
position with more than $6B in assets
under management (AUM) in floating and variable rate ETFs.
VRIG will focus on investment grade assets with ample liquidity
across a broad spectrum of asset classes. Broadly, the ETF will
focus investments in floating rate US Treasuries, government
sponsored agency mortgage-backed securities, US Agency debt,
structured securities and floating rate investment grade
corporates.
"IFI's investment process has many potential benefits which are
derived from our proprietary credit research that incorporates
loan, property and borrower-level analytics as well as continuous
risk management," said Tony Semak,
Senior Client Portfolio Manager at Invesco. "We are pleased
to be collaborating with PowerShares to bring this unique product
offering to the market."
The ETF will not utilize leverage, nor will it employ derivative
positions. The IFI team has a long history in Agency MBS,
Non-Agency MBS, ABS, CMBS and corporate bonds. In addition, the
investment team has been involved with ABS, CMBS and RMBS since the
early years of those markets.
The investment team's process, rooted in quantitative research,
offers a comprehensive approach to credit analytics and continuous
risk management. The investment team within IFI manages a mortgage
REIT, which was the first blind pool financials IPO post-financial
crisis. Additionally, the team was chosen by the US Treasury
Department to participate in the Public Private Investment Program
(PPIP) in 2009. PPIP was a plan designed to value and remove
troubled assets from the balance sheet of troubled financial
institutions in the US.
VRIG will primarily invest in variable and floating rate
investments, which have coupons that adjust with short term
interest rates. Should short term rates increase, the variable rate
coupons are designed to adjust upward and produce a higher yield.
Conversely, should short rates decrease, the yield of variable rate
securities will be lower. Additionally, as the result of their
significantly lower durations relative to fixed rate bonds, prices
of variable and floating rate bonds have generally fared better in
rising rate environments.
VRIG also has the ability to predominantly invest in
flight-to-quality assets such as US Treasuries and other government
debt should the residential or commercial credit cycle turn or
global market liquidity become impaired.
To learn more about PowerShares fixed income ETFs, please visit
our Innovative Income Solutions page:
https://www.invesco.com/portal/site/us/financial-professional/etfs/strategies/quest-for-income/
About Invesco PowerShares Capital Management LLC and Invesco,
Ltd.
Invesco PowerShares Capital Management LLC is leading
the Intelligent ETF Revolution® through its family of 140 domestic
and international exchange-traded funds, which seek to outperform
traditional benchmark indexes while providing advisors and
investors access to an innovative array of focused investment
opportunities. With U.S. franchise assets over $96 billion as of June 30,
2016. PowerShares ETFs trade on both US stock exchanges. For
more information, please visit us at invescopowershares.com or
follow us on Twitter @PowerShares.
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.
Correlation is the degree to which two investments have
historically moved in relation to each other.
Duration is a measure of the sensitivity of the price of a
fixed-income investment to a change in interest rates.
Risk Information
There are risks involved with
investing in ETFs, including possible loss of money. Actively
managed ETFs do not necessarily seek to replicate the performance
of a specified index. Actively managed ETFs are subject to risks
similar to stocks, including those related to short selling and
margin maintenance. Ordinary brokerage commissions apply. The
Fund's return may not match the return of the Index. The Fund is
subject to certain other risks. Please see the current prospectus
for more information regarding the risk associated with an
investment in the Fund.
The investment techniques and risk analysis used by the
portfolio managers may not produce the desired results.
Fixed-income investments are subject to credit risk of the
issuer and the effects of changing interest rates. Interest rate
risk refers to the risk that bond prices generally fall as interest
rates rise and vice versa. An issuer may be unable to meet interest
and/or principal payments, thereby causing its instruments to
decrease in value and lowering the issuer's credit rating. Junk
bonds involve a greater risk of default or price changes due to
changes in the issuer's credit quality. The values of junk bonds
fluctuate more than those of high quality bonds and can decline
significantly over short time periods.
Investments focused in a particular industry or sector are
subject to greater risk, and are more greatly impacted by market
volatility, than more diversified investments.
The fund may engage in frequent trading of its portfolio
securities in connection with the rebalancing or adjustment of the
underlying index.
The Fund is non-diversified and may experience greater
volatility than a more diversified investment. The Fund may hold
illiquid securities that it may be unable to sell at the preferred
time or price and could lose its entire investment in such
securities.
The Fund currently intends to effect creations and redemptions
principally for cash, rather than principally in-kind because of
the nature of the Fund's investments. As such, investments in the
Fund may be less tax efficient than investments in ETFs that create
and redeem in-kind.
If interest rates fall, it is possible that issuers of callable
securities will call or prepay their securities before maturity,
causing the Fund to reinvest proceeds in securities bearing lower
interest rates and reducing the Fund's income and
distributions.
Risks of collateralized loan obligations include the possibility
that distributions from collateral securities will not be adequate
to make interest or other payments, the quality of the collateral
may decline in value or default, the collateralized loan
obligations may be subordinate to other classes, values may be
volatile, and disputes with the issuer may produce unexpected
investment results. Defaulted securities involve the substantial
risk that principal will not be repaid and may be subject to
restrictions on resale.
An investment in exchange-traded funds (ETFs) may trade at a
discount to net asset value, fail to develop an active trading
market, halt trading on the listing exchange, fail to track the
referenced index, or hold troubled securities. ETFs may involve
duplication of management fees and certain other expenses. Certain
of the ETFs the fund invests in are leveraged, which can magnify
any losses on those investments.
For mortgage-backed securities, if interest rates rise,
borrowers may prepay mortgages more slowly than originally
expected. This may further reduce market value and lengthen
durations.
Instruments issued by government agencies, including the Federal
National Mortgage Association ("Fannie Mae") and the Federal Home
Loan Mortgage Corporation ("Freddie Mac"), are generally only
backed by the general creditworthiness and reputation of the
issuing government agency and are not backed by the full faith and
credit of the US government. As a result, there is uncertainty as
to the current status of many obligations that are placed under
conservatorship of the federal government.
Income generated from the Fund is based primarily on prevailing
interest rates, which can vary widely over the short- and
long-term. If interest rates drop, the Fund's income may drop as
well.
Preferred securities may include provisions that permit the
issuer to defer or omit distributions for a certain period of time,
and reporting the distribution for tax purposes may be required,
even though the income may not have been received. Further,
preferred securities may lose substantial value due to the omission
or deferment of dividend payments.
Reinvestment risk is the risk that a bond's cash flows (coupon
income and principal repayment) will be reinvested at an interest
rate below that on the original bond.
Obligations issued by US Government agencies and
instrumentalities may receive varying levels of support from the
government, which could affect the Fund's ability to recover should
they default.
Shares are not individually redeemable and owners of the shares
may acquire those shares from the Fund and tender those shares for
redemption to the Fund in Creation Unit aggregations only,
typically consisting of 50,000, 75,000, 100,000 or 200,000
shares.
PowerShares® is a registered trademark of Invesco PowerShares
Capital Management LLC, investment adviser. Invesco PowerShares
Capital Management LLC (Invesco PowerShares) and Invesco
Distributors, Inc., ETF distributor, are indirect, wholly owned
subsidiaries of Invesco Ltd.
Note: Not all products available through all firms. Before
investing, investors should carefully read the prospectus/summary
prospectus and carefully consider the investment objectives, risks,
charges and expenses. For this and more complete information about
the Fund call 800 983 0903 or visit invescopowershares.com for the
prospectus/summary prospectus.
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SOURCE Invesco PowerShares Capital Management, LLC