PowerShares launches low-volatility Canadian equity index ETF

PowerShares low-volatility offerings, which include TLV and the recently launched PowerShares S&P 500 Low-Volatility (CAD Hedged) Index ETF (TSX: ULV), are designed to provide investors with core exposure to Canadian and U.S. equities, while offering a measure of protection against market downturns. Meanwhile, the high-beta ETFs allow investors to potentially capitalize on bull markets by adding beta to their portfolio.

“Be it a bull or bear market, PowerShares’ suite of high-beta/low-volatility ETFs now gives Canadian investors the tools needed to respond to changing market environments,” says Michael Cooke, head of distribution for PowerShares Canada.

Using a transparent index methodology created by index provider S&P Indices, TLV is designed to give investors exposure to the 50 stocks from the S&P/TSX Composite Index with the lowest realized volatility, or standard deviation, over the past 252 trading days, rebalanced on a quarterly basis.

“With a management fee of just 30 basis points, TLV provides investors with a simple and cost-effective way to gain exposure to a diversified portfolio of low-volatility Canadian equities,” says Cooke. “As a core equity holding, Canadian investors are finding that low-volatility strategies can improve a portfolio’s risk-return profile.”

Meanwhile, THB is designed to give investors exposure to the 50 stocks in the S&P/TSX Composite Index with the highest beta (i.e., sensitivity to changes in market returns), while UHB provides exposure to the 100 stocks in the S&P 500 Index with the highest beta (for a complete breakdown of management fees and distribution frequency, see table below).

TLV, THB and UHB have closed the initial offering of their units and began trading on Toronto Stock Exchange on Tuesday.