PowerShares has filed for an exchange traded fund (ETF) that would invest in speculative bank loans, while a new VIX exchange traded note (ETN) could soon hit the scene.
The provider filed papers with the Securities and Exchange Commission to launch the PowerShares S&P Bank Loan Portfolio. The ETF will track the S&P/LSTA U.S. Leveraged Loan 100 Index through representative sampling, reports Cinthia Murphy for Index Universe.
The ETF will track the market-weighted performance of the largest institutional leveraged loans based on market weightings, spreads and interest payments, and the index will rebalance semi annually. Leveraged loans are those rated below investment-grade or are unrated. [New ETFs: Hedge Fund Replication, Treasuries.]
Murray Coleman for Barron’s reports that Citigroup has also filed with the SEC for an ETN that will follow a volatility index rivaling those offered by Barclays.
The new C-Tracks Citi Volatility Index ETN is designed to take long positions on a portfolio of third- and fourth- month VIX futures contracts, similar to iPath S&P 500 VIX Short-Term Futures ETN (NYSEArca: VXX). But the new C-Tracks will leverage its holdings by a factor of 200%. It’ll also have the flexibility to take short positions in the S&P 500 Total Return Index. [VIX ETNs: Calm Before the Storm?]
Tisha Guerrero contributed to this article.
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