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PowerShares Files For PowerShares Gold Allocation Portfolio ETF

April 23rd, 2012

PowerShares has filed paperwork with the SEC for a “PowerShares Gold Allocation Portfolio” ETF. The PowerShares Gold 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 gold, and exchange-listed futures contracts on the CBOE Gold ETF Volatility Index (“Gold 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.

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The Benchmark’s allocation to futures contracts on the Gold VIX Index serves as an implied volatility hedge against exposure to gold futures, as volatility historically tends to correlate negatively to the performance of the gold 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 SPDR Gold Shares Trust, which is an exchange-traded product that primarily invests in gold bullion and whose performance is intended to reflect the spot price of gold.  The Gold VIX Index measures the 30-day forward volatility of gold prices as calculated based on the prices of certain put and call options on SPDR Gold Shares Trust.  The Gold 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 Gold VIX Index. However, during periods of lower volatility, a greater portion of the Fund’s assets will be invested in gold 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 gold commodity market and futures contracts on the Gold 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

Related: (NYSEArca:GLD), (NYSEArca:IAU), (NYSEArca:GLD), (NYSEArca:GDXJ)


NEW FILING


 

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