Invesco PowerShares has announced the listing of the PowerShares S&P 500 Veqtor Ucits ETF on London Stock Exchange.
The company added that there will be further listings across selected European countries.
The ETF will seek to generate positive returns in rising US equity markets with the intention to partially reduce potential losses in falling markets. It tracks the S&P 500 Dynamic Veqtor Index, which dynamically allocates long-only exposure between the S&P 500 Index, the S&P VIX Short-Term Futures Index, and cash.
“This provides broad exposure to the US equity market through the S&P 500 Index, while the S&P 500 VIX Short-Term Futures Index tends to correlate negatively to the performance of the S&P 500 Index. As such, the index seeks to mitigate risk between equity and volatility, while attempting to partially reduce potential losses in volatile markets,” the company said.
The S&P 500 Dynamic Veqtor Index also incorporates a stop loss mechanism, so if the index losses are 2% or above in the five preceding business days, the entire allocation moves to cash or cash equivalents until losses are no longer at this level.
The ETF employs a rules-based strategy designed to provide returns in line with the performance of the S&P 500 Veqtor Index and will invest in a combination of equity securities in the S&P 500 Index, VIX futures, cash or cash equivalents. The asset allocation within the index is determined by analysing historical and implied market volatility, as well as market performance. The ETF will usually maintain a minimum of 2.5% exposure to VIX futures and, in periods when market uncertainty rises, it can allocate as much as 40% of the portfolio to VIX futures.
Bryon Lake, head of Invesco PowerShares – EMEA, says: “Capital preservation has become an increasingly important and relevant component of investing. We don’t need to look far back to remember how quickly and unexpectedly market volatility can strike in today’s market environment. Investors are looking for intuitive solutions which allow them to refine their exposure in key markets, like US equities. The challenge is to both generate returns while at the same time reduce downside risk. The PowerShares S&P 500 Veqtor Ucits ETF seeks to manage this challenge by providing many of the characteristics of liquid alternatives and tracking a dynamically managed index which can potentially mitigate high equity market volatility.”
Invesco PowerShares plans to list the PowerShares S&P 500 Veqtor Ucits ETF across the following exchanges:
|PowerShares S&P 500 Veqtor Ucits ETF – Targeted listing date|
|Irish Stock Exchange||11 June|
|Euronext Paris||19 June|
|Deutsche Börse XETRA||19 June|
|Borsa Italiana||19 June|
|SIX Swiss Exchange||TBC|
The launch of the PowerShares S&P 500 Veqtor Ucits ETF is part of Invesco PowerShares’ ongoing strategy to offer new and innovative solutions to the smart beta market and to further strengthen its core US equity exposure proposition following the recent launch of the PowerShares S&P 500 High Dividend Low Volatility Ucits ETF.
These launches reinforce Invesco PowerShares’ position as the only ETF provider to offer a wide range of smart beta solutions in the U.S. equity space.
Invesco PowerShares was the first-to-market with Smart Beta ETFs. Since 2003 in the US and 2007 in Europe, it has been offering a selection of ETFs that track “next generation” indices, indices that go beyond merely tracking a particular market.
It offers an effective alternative to traditional market-capitalisation-weighted indexing, offering solutions with the objective to outperform through intelligent security selection and weighting. Invesco PowerShares was recently named “Best Smart Beta ETF Provider” by ETF Express in recognition of its position in the market.