- Invesco PowerShares introduces DWIN that targets diversified, high-yielding assets
- The new ETF is a fund of funds, which means that it holds ETFs as its underlying component
- It may also favor overweighting U.S. Treasuries and reduce holdings to less than five components
Invesco PowerShares has introduced a multi-asset income exchange traded fund to provide yield-oriented investors with a simple fund-of-funds that targets a group of diversified, high-yielding assets.
The newly launched PowerShares DWA Tactical Multi-Asset Income Portfolio (NasdaqGM: DWIN) will try to reflect the performance of the Dorsey, Write & Associates Multi-Asset Iincome Index, which selects components on a combination of relative strength – a momentum indicator, along with current yield, according to a press release. DWIN has a 0.69% expense ratio.
“This strategy is unique in its ability to pivot within a broad array of income funds toward areas that exhibit strong relative strength with an emphasis on income generation,” Tammy DeRosier, President of Dorsey, Wright & Associates, said in the press release.
Relative strength is the measure of a security’s performance over time as compared to the performance of all other securities.
“Therefore, at any given time, the components of the Underlying Index are those Eligible ETFs that the Index Provider believes offer the greatest potential to outperform other Eligible ETFs,” according to the prospectus sheet.
The new ETF is a fund of funds, which means that it holds ETFs as its underlying components, instead of securities of individual companies.
Specifically, DWIN includes about an equal split between five components, including PowerShares Preferred Portfolio (NYSEArca: PGX), PowerShares Build America Bond Portfolio (NYSEArca: BAB), PowerShares High Yield Equity Dividend Achievers Portfolio (NYSEArca: PEY), Powershares Global Short Term High Yield Bond Portfolio (NYSEArca: PGHY) and PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEArca: PCY).
Individually, PGX has a 5.93% 12-month yield, BAB has a 4.53% 12-month yield, PEY has a 3.60% 12-month yield, PGHY has a 4.64% 12-month yield and PCY has a 5.51% 12-month yield.
“Despite increased volatility in financial markets, we recognize that investors still expect better than average returns, which has become increasingly difficult for income investors looking for yield,” Dan Draper, Head of Invesco PowerShares, said in the press release. “This new multi-asset income solution helps investors navigate volatility using a sub-sector ETF rotation strategy covering a universe of seven income producing segments including treasuries.”
According to the prospectus, DWIN may rotate into a range of income-generating assets, including U.S. Treasuries, domestic and international bonds, dividend paying equities, preferred stocks, real estate investment trusts and master limited partnerships. The index may also favor overweighting U.S. Treasuries and reduce holdings to less than five components. Underlying components are evaluated on a monthly basis.