PowerShares Introduces Four KBW Financial ETFs

December 6, 2010 by  
Filed under Commentary, ETF IPOs (New ETFs), ETFs

PowerShares introduced four new ETFs based on KBW financial industry indexes on 12/02/2010.  This marks the first time that PowerShares and KBW (Keefe, Bruyette & Woods) have teamed up in the ETF space.  Seven other ETFs based on different KBW indexes are currently on the market under the SPDR and ProShares brands.

The new ETFs are PowerShares KBW High Dividend Yield Financial Portfolio (KBWD), PowerShares KBW International Financial Portfolio (KBWX), PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY), and PowerShares KBW Property & Casualty Insurance Portfolio (KBWP).  Each intends to track the similarly named KBW index.

PowerShares KBW High Dividend Yield Financial Portfolio (KBWD) has a total expense ratio of 0.93% consisting of a 0.35% management fee and 0.58% acquired fund fees and expenses.  It uses a dividend yield-weighted methodology that seeks to reflect the performance of approximately 24 to 40 publicly listed financial companies.  It may also include securities of business development companies (BDCs) and equity and mortgage REITs. The largest of the 38 current holdings include Chimera Investment (CIM) 7.8%, Hatteras Financial (HTS) 5.9%, Annaly Capital Management (NLY) 5.3%, Capstead Mortgage (CMO) 5.3%, and Anworth Mortgage Asset (ANH) 5.1%.  KBWD overview

PowerShares KBW International Financial Portfolio (KBWX) has a 0.40% expense ratio.  It will invest primarily in American Depository Receipts (ADRs) using a modified market capitalization approach targeting 60 non-U.S. financial companies principally engaged in providing financial services and products.  The largest holdings include Itau Unibanco Holding S/A ADS (ITUB) 5.9%, Westpac Banking Corp ADS (WBK) 4.5%, Banco Santander S.A. ADS (STD) 3.7%, and HDFC Bank Ltd ADS (HDB) 3.7%.  Top country weightings are Canada 14.9%, Brazil 13.2%, UK 8.1%, Switzerland 7.6%, and Spain 7.2%.  KBWX overview

PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY) has a 0.35% expense ratio.  It uses a dividend yield weighted methodology that seeks to reflect the performance of approximately 24 to 40 small-cap and mid-cap equity REITs in the United States.  The largest of the 30 current holdings include Agree Realty (ADC) 5.0%, Sun Communities (SUI) 4.6%, CommonWealth REIT (CWH) 4.5%, Hospitality Properties Trust (HPT) 4.1%, and Medical Properties Trust (MPW) 3.9%.  KBWY overview

PowerShares KBW Property & Casualty Insurance Portfolio (KBWP) has a 0.35% expense ratio.  It uses a modified market capitalization weighted index that seeks to reflect the performance of about 24 property and casualty insurance companies.  The largest holdings include Allstate (ALL) 9.1%, Travelers (TRV) 8.7%, Chubb (CB) 8.5%, Progressive (PGR) 7.7%, and Arch Capital Group (ACGL) 5.2%.  KBWP overview

Fact sheets are currently not available, but when they are, they will be accessible from the links provided above.  Additional information can be found in the prospectus (pdf) covering all four ETFs.

The current lineup of eleven ETFs based on KBW indexes:

  1. PowerShares KBW High Dividend Yield Financial Portfolio (KBWD)
  2. PowerShares KBW International Financial Portfolio (KBWX)
  3. PowerShares KBW Premium Yield Equity REIT Portfolio (KBWY)
  4. PowerShares KBW Property & Casualty Insurance Portfolio (KBWP)
  5. ProShares Ultra KBW Regional Banking (KRU) (KRU & KRS launch article)
  6. ProShares Short KBW Regional Banking (KRS)
  7. SPDR KBW Bank ETF (KBE)
  8. SPDR KBW Capital Markets ETF (KCE)
  9. SPDR KBW Insurance ETF (KIE)
  10. SPDR KBW Mortgage Finance ETF (KME) (KME launch article)
  11. SPDR KBW Regional Banking ETF (KRE)

Disclosure covering writer, editor, and publisher:  No positions in any of the securities mentioned.  No positions in any of the companies or ETF sponsors mentioned.  No income, revenue, or other compensation (either directly or indirectly) received from, or on behalf of, any of the companies or ETF sponsors mentioned.

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