Through its new PureBeta suite, PowerShares has launched a bond ETF to help investors cheaply and easily access broad diversified exposure in the fixed-income market.
On Friday, Invesco PowerShares rolled out the PowerShares PureBeta US Aggregate Bond Portfolio (BATS: PBND), which comes with a low 0.05% expense ratio.
PBND tries to reflect the performance of the BofA Merrill Lynch US Broad Market Index, which is comprised of U.S. dollar-denominated, investment-grade debt securities, including U.S. Treasury notes and bonds, quasi-government securities, corporate securities, residential and commercial mortgage-backed securities and asset-backed securities.
Unlike its other fundamental or smart beta index-based ETF options that PowerShares is known for, the new PureBeta lineup consists of traditional beta-index ETF plays. While the new PowerShares ETFs are not anything new in the ETF space, the funds are among the cheapest options covering their respective benchmark indices. The competitive pricing may be one way for PowerShares to wrestle assets away from more established ETFs tracking the same benchmarks. The new ETFs’ price points are only a few basis points off from the cheapest ETFs in their respective categories as well.
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The new PureBeta US Aggregate Bond Portfolio matches the pricing of its biggest fund competitors, including the $50.3 billion iShares Core U.S. Aggregate Bond ETF (NYSEArca: AGG), which tracks the Bloomberg Barclays US Aggregate Bond Index, and $35.8 billion Vanguard Total Bond Market ETF (NYSEArca: BND), which follows the Bloomberg Barclays U.S. Aggregate Float-Adjusted Index. Both AGG and BND come with a 0.05% expense ratio.
The honor of cheapest aggregate bond or total bond ETF strategy goes to the $4.3 billion Schwab U.S. Aggregate Bond ETF (NYSEArca: SCHZ), which also tries to reflect the performance of the Bloomberg Barclays U.S. Aggregate Bond Index. SCHZ shows a dirt cheap 0.04% expense ratio.
To put the price points in perspective, there are 320 U.S.-listed bond ETFs on the market with an average 0.37% expense ratio.
PBND joins the PureBeta ETF lineup, which was launched just last week, including the PowerShares PureBetaSM MSCI USA Portfolio (BATS: PBUS), PowerShares PureBetaSM MSCI USA Small Cap Portfolio (BATS: PBSM), PowerShares PureBetaSM FTSE Developed ex-North America Portfolio (BATS: PBDM), PowerShares PureBetaSM FTSE Emerging Markets Portfolio (BATS: PBEE) and PowerShares PureBetaSM 0-5 Yr US TIPS Portfolio (BATS: PBTP).
For more information on new fund products, visit our new ETFs category.