PowerShares gets active

Actively managed exchange traded funds, which were introduced this year, haven't caught fire, but that didn't stop Invesco PowerShares Capital Management LLC from launching its fifth such ETF last month.
NOV 30, 2008
Actively managed exchange traded funds, which were introduced this year, haven't caught fire, but that didn't stop Invesco PowerShares Capital Management LLC from launching its fifth such ETF last month. The PowerShares Active U.S. Real Estate Fund (PSR) seeks to provide high total return by investing in publicly traded U.S. real estate companies that are selected using a proprietary stock selection model. The selection methodology seeks to outperform its benchmark, the FTSE NAREIT Equity REITs Index, using quantitative and statistical metrics to identify attractively priced securities and manage risk. "I do like to see that despite the sturm and drang of a chaotic marketplace, that PowerShares continues to be inventive and productive," said Jim Lowell, Needham, Mass.-based editor of Forbes ETF Advisor, a monthly newsletter. Investors, however, haven't been impressed with the Wheaton, Ill.-based firm's previous efforts at actively managed ETFs. Launched in April, the PowerShares Active Alpha Multi-Cap Fund (PQZ) had $7 million in assets, the PowerShares Active AlphaQ Fund (PQY) had $4 million in assets, the PowerShares Active Low Duration Fund (PLK) had $3 million in assets, and the PowerShares Active Mega-Cap Fund (PMA) had $2 million in assets, according to the most recent data from Morningstar Inc. of Chicago. Invesco PowerShares' lack of success prompts the question: Do investors really want such products? It is too early to tell, Mr. Lowell said. Invesco PowerShares was unlucky in that it launched its actively managed ETFs into a collapsing market, he said. "People are so paralyzed that considering anything that's new goes right to the back of the line," Mr. Lowell said. Once the markets calm down and the ETFs have had a chance to prove themselves, investors may be more willing to give them a look, he said.

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