NEW ETF ONE STEP AHEAD OF THE TREASURY?

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March 24, 2009 4:17pm ETF BASIC NEWS

geithner

For those who took a day off from the news yesterday, Treasury Secretary Tim Geithner unvailed his plan to relieve banks from their toxic assets and clean up their balance sheets. The market reacted well to the news that the FED will be looking to private investors to partner up with and bid to buy these assets from the banks, presuming the banks are willing to part with these assets for a loss. The benefit’s to the banks is a clean balance sheet, and the benefits to the investor is betting on the asset’s upside.  The principle at play is the proposed theory that the assets are below their fundamental values. What we find interesting is that PROSHARES announced the registration of two new funds waaaay back on the 29th of January. These funds, PowerShares Prime Non-Agency RMBS Opportunity Fund, and PowerShares Alt-A Non-Agency RMBS Opportunity Fund are designed for the exact same purpose. It will be very interesting to see if these funds will be allowed to participate in Geithner’s plan. If that is the case, I think I will be looking very strongly at taking a dip in the bad asset pool. I have attached a teaser to the release below, click the link at the bottom of this post for the full story. We here at ETFDAILYNEWS would love to know your thoughts on this, as it is a pretty interesting new ETF idea.


PowerShares Prime Non-Agency RMBS Opportunity Fund

Invesco PowerShares Pioneers Non-Agency Mortgage-Backed Securities ETFs

 CHICAGO – Jan. 28, 2009 – Invesco PowerShares Capital Management LLC, a leading provider of exchange-traded funds (ETFs), today announced that it has filed registration statements for two new actively managed ETFs focused on the non-agency, Prime and Alt-A residential mortgage-backed securities (RMBS) markets. The anticipated fund names are as follows:

• PowerShares Alt-A Non-Agency RMBS Opportunity Fund

• PowerShares Alt-A Non-Agency RMBS Opportunity Fund

“We believe that various economic factors have converged to push the prices of many Prime and Alt-A residential mortgage-backed securities well below their fundamental values,” said Bruce Bond, president and CEO of Invesco PowerShares. “We are hopeful that these ETFs will provide access and transparency into these markets along with some of the much needed additional liquidity originally intended by the TARP.” 

The Residential Mortgage-Backed Securities (RMBS) Market Aggressive mortgage lending practices, declining home prices and a faltering economy have caused mortgage loan performance to deteriorate significantly over the last two years. Many holders of mortgage related securities have come under pressure to raise capital and reduce exposure to RMBS markets, resulting in systematic de-leveraging. Invesco PowerShares believes that these events have pushed the prices of many residential mortgage-backed securities well below fundamental values implied by conservative cash flow projections. Even the prices of senior and super senior residential mortgage-backed securities, which generally have first right to principal payments and are typically the last to sustain losses, have been severely impacted despite their significant credit enhancement and advantageous position within the capital structure. As such, Invesco PowerShares believes this may be an opportunity for investors to recognize above average risk-adjusted returns by investing in discounted senior and super senior Prime and Alt-A residential mortgage-backed securities. In addition, Invesco PowerShares believes these securities should generate current principal and interest income as well as potential capital gains.

Link to full article: http://www.invescopowershares.com/news/pdf/NR%20012809%20IPS%20Pioneers%20Non-Agency%20Mortgage-Backed%20Securities.pdf

source: invescopowershares.com



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