Invesco PowerShares launched two new smart beta exchange traded funds based on the S&P 500 and Russell 1000 to potentially help investors enhance returns and reduce potential drawdowns.
PowerShares recently came out with the PowerShares S&P 500 Minimum Variance Portfolio (BATS: SPMV) and PowerShares Russell 1000 Enhanced Equal Weight Portfolio (BATS: USEQ). SPMV has a 0.13% expense ratio while USEQ has a 0.29% expense ratio.
The S&P 500 Minimum Variance Portfolio tries to reflect the performance of the S&P 500 Minimum Volatility Index, which measures the performance of a portfolio of equity securities using a managed volatility strategy that seeks to achieve lower total risk than the benchmark S&P 500.
The underlying index weights components using a managed volatility methodology that is designed to diminish the overall expected volatility or reduce the magnitude of price fluctuations of the index.
In contrast, the more widely known PowerShares S&P 500 Low Volatility Portfolio (NYSEArca: SPLV) only targets the 100 stocks from the S&P 500 with the lowest realized volatility over the past 12 months.