PowerShares Files For PowerShares Crude Oil Allocation Portfolio ETF
PowerShares has filed paperwork with the SEC for a “PowerShares Crude Oil Allocation Portfolio” ETF. The PowerShares Crude Oil Allocation Portfolio (the “Fund”) is an actively managed exchange-traded fund (“ETF”) that seeks to achieve capital appreciation. They did not specify a trading symbol or expense ratio in the initial filing.
Principal Investment Strategies
The Fund seeks to achieve its investment objective by using a quantitative, rules-based strategy that is designed to provide returns that correspond to the performance of the [ ] (the “Benchmark”). The Fund, in accordance with its strategy allocation rules, will invest substantially all of its assets in a combination of exchange-listed futures contracts on crude oil, and exchange-listed futures contracts on the CBOE Crude Oil ETF Volatility Index (“Oil VIX Index”). The Fund also will invest in U.S. Government securities, money market instruments (including repurchase agreements), structured notes, cash and cash equivalents to collateralize its derivative investments or for other purposes.
The Benchmark’s allocation to futures contracts on the Oil VIX Index serves as an implied volatility hedge against exposure to crude oil futures, as volatility historically tends to correlate negatively to the performance of the oil commodity market (i.e., rapid declines in the performance of the market generally are associated with particularly high volatility in that market). “Implied volatility” is a measure of the expected volatility of the United States Oil Fund, which is an exchange-traded security designed to track changes in crude oil prices and reflect the spot price of West Texas Intermediate light, sweet crude oil. The Oil VIX Index measures the 30-day forward volatility of crude oil prices as calculated based on the prices of certain put and call options on the United States Oil Fund, LP. The Oil VIX Index is a theoretical calculation and cannot be traded.
During periods of increased volatility, a greater portion of the Fund’s assets will be invested in futures contracts on the Oil VIX Index. However, during periods of lower volatility, a greater portion of the Fund’s assets will be invested in crude oil futures. Although the Fund seeks returns comparable to the returns of the Benchmark, the Fund can have a higher or lower exposure to any component within the Benchmark at any time.
[The Fund seeks to gain exposure to the crude oil commodity market and futures contracts on the Oil VIX Index by investing in a subsidiary organized in the Cayman Islands (the “Subsidiary”). The Subsidiary would be wholly-owned and controlled by the Fund. Should the Fund invest in the Subsidiary, it would be expected to provide the Fund with exposure to investment returns from futures contracts within the limits of the federal tax requirements applicable to investment companies, such as the Fund. Unlike the Fund, the Subsidiary may invest without limitation in futures contracts and may use leveraged investment techniques. The Subsidiary would otherwise be subject to the same general investment policies and restrictions as the Fund. Except as noted, references to the investment strategies of the Fund for non-equity investments include the investment strategies of the Subsidiary.]
For the complete filing click: HERE