PowerShares Canada has announced the launch of the PowerShares Tactical Bond ETF (PTB), an actively managed diversified fixed income ETF that seeks to provide both income and capital growth.
PowerShares Canada has launched the PowerShares Tactical Bond ETF (PTB), an actively managed tactical bond ETF strategically diversified across fixed income asset classes.
Strategically diversified across fixed income asset classes, the fund will invest primarily in a mix of Canadian government, investment-grade corporate and real return bonds, and US high-yield bonds.
The fund employs active tactical shifts to take advantage of market opportunities while seeking to protect capital during market downturns.
The fund will be managed by Invesco’s Global Asset Allocation (GAA) team and led by portfolio manager Scott Wolle. The GAA team uses an overall diversification strategy that employs asset classes that have historically performed well in different economic cycles: recessionary, non-inflationary growth and inflationary growth.
Michael Cooke, Head of Distribution for PowerShares Canada, said: “This newest ETF provides diversified fixed-income exposure for investors and financial advisors through changing financial markets. Compared to a traditional portfolio of Canadian government and investment-grade corporate bonds, PTB provides the opportunity for higher yields, while managing risk.”
The fund’s main allocation will be to Canadian corporate bonds, which will range from 30% to 90% of the portfolio, according to the fund’s prospectus. Canadian long-term government bonds, typically the fund’s second largest component, will range between 15% and 50%, while real return (0-15%), high-yield (0-20%) and international bonds (0-10%) will make up the remainder. The fund may also at times have some exposure to gold and silver.
The fund will gain exposure to these asset classes by investing primarily in other PowerShares ETFs, though third-party ETFs can also be used.
The fund is currently comprised of the PowerShares 1-5 Year Laddered Investment Grade Corporate Bond Index ETF (PSB) at a weight of 54.0%, the PowerShares Ultra DLUX Long Term Government Bond Index ETF (PGL) at 26.1%, the PowerShares Fundamental High Yield Corporate Bond (CAD Hedged) Index ETF (PFH) at 15%, and the BMO Real Return Bond Index ETF (ZRR) at 4.4%.
The fund, which will be rebalanced on a monthly basis based on market conditions, has been listed on the Toronto Stock Exchange (TSX) and has an annual management fee of 0.49%.
In the Canadian market, the fund will likely compete against the TSX-listed Horizons Tactical Bond ETF (HAF), which launched back in July 2009 and has a management fee of 0.45%.