today on the NASDAQ Stock Market, LLC.
LDRI expands Invesco PowerShares existing lineup of low duration income ETFs which includes: PowerShares Senior Loan Portfolio (BKLN), PowerShares Chinese Yuan Dim Sum Bond Portfolio (DSUM), PowerShares Global Short Term High Yield Bond Portfolio (PGHY) and PowerShares Variable Rate Preferred Portfolio (VRP). As the newest addition, PowerShares LadderRite® 0-5 Year Corporate Bond Portfolio (LDRI) employs an equal weighted annual maturity ladder strategy that may help investors potentially mitigate interest rate risk while generating income.
“In today’s low-rate environment, investors continue to be wary of interest rate risk in their pursuit of investment income” said Dan Draper, Invesco PowerShares Global Head of ETFs. ”LDRI provides what we view as a more intelligent solution to help investors address this ongoing challenge compared to many existing fixed income solutions in the marketplace.”
LDRI tracks the NASDAQ LadderRite® 0-5 Year Corporate Bond Index, providing access to investment-grade, fixed coupon, USD-denominated bonds issued by companies in the US, Canada, Western Europe and Japan. Bonds included in the index have an investment-grade rating from Fitch, Moody’s or S&P, a minimum outstanding of $500 million, and five years or less to maturity. The laddering methodology evenly staggers bond maturities so that they occur on regular intervals, providing an efficient balance between risk and return, which may help investors manage volatility during a period of rising interest rates.
“One of the differentiating features of LDRI is the patent-pending rebalancing process used in its underlying LadderRite Index,” added Joseph Becker, Fixed Income Product Strategist at Invesco PowerShares. “The Index will generally hold bonds to maturity. This feature, combined with its unique rebalancing methodology can help to reduce the trading requirements associated with index reconstitutions, potentially providing more efficient access for investors.”
To learn more about the PowerShares LadderRite® 0-5 Year Corporate Bond Portfolio (LDRI), please visit www.PowerShares.com/portal/site/us/investors/etfs/featured-funds/LDRI
About Invesco PowerShares Capital Management LLC and Invesco, Ltd.
Invesco PowerShares Capital Management LLC is leading the Intelligent ETF Revolution® through its family of more than 140 domestic and international exchange-traded funds, which seek to outperform traditional benchmark indexes while providing advisors and investors access to an innovative array of focused investment opportunities. With franchise assets of over $100 billion* as of August 31, 2014, PowerShares ETFs trade on both US stock exchanges. For more information, please visit us at invescopowershares.com or follow us on Twitter @PowerShares.
Invesco Ltd. is a leading independent global investment management firm, dedicated to helping investors worldwide achieve their financial objectives. By delivering the combined power of our distinctive investment management capabilities, Invesco provides a wide range of investment strategies and vehicles to our clients around the world. Operating in more than 20 countries, the firm is listed on the New York Stock Exchange under the symbol IVZ. Additional information is available at www.invesco.com.
*US franchise assets include QQQs, BLDRS and DB Funds. ALPS Distributors, Inc. is the distributor of PowerShares QQQ, BLDRS Funds and PowerShares DB Funds. PowerShares QQQ and BLDRS Funds are unit investment trusts. Invesco PowerShares and Invesco Distributors, Inc. are not affiliated with ALPS Distributors, Inc.
Not FDIC Insured | May Lose Value | No Bank Guarantee
Important Risk Information
Beta is a measure of risk representing how a security is expected to respond to general market movements. Smart Beta represents an alternative and selection index based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk.
There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply.
LDRI, DSUM, BLKN, PGHY and VRP
The Funds are considered non-diversified and may be subject to greater risks than a diversified fund.
LDRI, DSUM, BLKN and PGHY
The Fund’s use of a representative sampling approach will result in its holding a smaller number of bonds than are in the underlying Index, and may be subject to greater volatility.
Investments in fixed-income securities, such as notes and bonds, carry interest rate and credit risk. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. Credit risk is the risk of loss on an investment due to the deterioration of an issuer’s financial health. Due to anticipated Federal Reserve Board policy changes, there is a risk that interest rates will rise in the near future.
LDRI, DSUM, PGHY and VRP
The Fund’s underlying securities may be subject to call risk, which may result in the Fund having to reinvest the proceeds at lower interest rates, resulting in a decline in the Fund’s income.
LDRI, PGHY and VRP
Foreign securities have additional risks, including exchange-rate changes, decreased market liquidity, political instability and taxation by foreign governments.
LDRI and PGHY
Liquidity risk exists when a particular investment is difficult to purchase or sell. If the Fund invests in illiquid securities or current portfolio securities become illiquid, it may reduce the returns of the Fund because the Fund may be unable to sell the illiquid securities at an advantageous time or price.
The Fund will invest in foreign bonds and, because foreign exchanges may be open on days when the Fund does not price its shares, the value of the non-US securities in the Fund’s portfolio may change on days when you will not be able to purchase or sell your shares.
A natural or other disaster could occur in a geographic region in which the Fund invests, which could adversely impact the Fund’s investments in the affected region.
BKLN and PGHY
Non-investment grade securities may be subject to greater price volatility due to specific corporate developments, interest-rate sensitivity, negative perceptions of the non-investment grade securities market, adverse economic and competitive industry conditions and decreased market liquidity.
DSUM and VRP
Investments focused in a particular industry are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.
DSUM and PGHY
Global bonds are subject to the same risks as other debt issues, notably credit risk, market risk, interest rate risk and liquidity risk. Investments in the securities of non-US issuers involve risks beyond those associated with investments in US securities, including greater market volatility, the availability of less reliable financial information, higher transactional costs, taxation by foreign governments, decreased market liquidity and political instability.
The Fund will invest in bonds with short- or immediate term (five years or less) maturity. Short-term and immediate-term maturity may have additional risks, including interest rate changes over the life of a bond. The average maturity of the Fund’s investments will affect the volatility of the Fund’s share price.
Financial information related to securities of non-US issuers may be less reliable than information related to securities of US issuers, which may make it difficult to obtain a current price for a non-US security held by the Fund.
Investments in loans are subject to interest rate risk and credit risk. There is no organized exchange on which loans are traded and reliable market quotations may not be readily available.
When-issued and delayed delivery transactions are subject to market risk, as the value or yield of a security at delivery may be more or less than the purchase price or the yield generally available on securities when delivery occurs and also subjects the fund to counterparty risk.
The fund may engage in frequent trading of its portfolio securities in connection with the rebalancing or adjustment of the Underlying Index.
Investments in senior loans typically are below investment grade and are considered speculative because of the credit risk of their issuers.
The ability of the borrower of a loan to repay principal prior to maturity can limit the potential for gains by the Fund.
The Fund currently intends to effect creations and redemptions principally for cash, rather than principally in-kind because of the nature of the Fund’s investments. As such, investments in the Fund may be less tax efficient than investments in ETFs that create and redeem in-kind.
The Fund invests at least 80% of its assets in Chinese RMB-denominated bonds issued and settled outside of mainland China. Because the Fund’s net asset value (NAV) is determined in US dollars, the NAV could decline if the currency of the non-US market in which the Fund invests depreciates against the US dollar, even if the value of the Fund’s holdings increases, as measured in the foreign currency, including securities denominated in the Chinese RMB. In addition, if the Chinese currencies, the RMB, which is traded in mainland China and the Yuan, which is traded offshore (traded as “CNH” in Hong Kong), diverge in value, that divergence could negatively impact the Fund.
Unlike most ETFs, the Fund currently intends to effect redemptions principally for cash and partially in-kind, rather than primarily in-kind redemptions because of the nature of the Fund’s investments. As such, investments in Shares may be less tax efficient than investments in conventional ETFs.
The Fund may hold illiquid securities that it may be unable to sell at the preferred time or price and could lose its entire investment in such securities.
Adverse economic conditions, such as unfavorable or volatile currency exchange rates and interest rates, political events or other conditions may cause the Chinese government to intervene and impose “capital controls,” including the prohibition of, or restrictions on, the ability to transfer currency, securities or other assets.
There are special risks associated with investing in securities designed to provide exposure to Chinese RMB, such as RMB-denominated bonds in which the Fund will invest. The Chinese government maintains strict currency controls and regularly intervenes in the currency market. As a result, the value of the RMB, and the value of RMB-denominated securities, may change quickly and arbitrarily, potentially impacting the availability, liquidity, and pricing of securities designed to provide offshore investors with exposure to Chinese markets.
Sovereign debt securities are subject to the additional risk that — under some political, diplomatic, social or economic circumstances — some developing countries that issue lower quality debt securities may be unable or unwilling to make principal or interest payments as they come due. The fund may have limited legal recourse against the issuer and/or guarantor of sovereign debt when default occurs. As a holder of government debt, the Fund may be requested to participate in the rescheduling of such debt and to extend further loans to government debtors.
The Fund will invest in bonds with a short-term (three years or less) maturity. Short-term maturity may have additional risks, including interest rate changes over the life of a bond. The average maturity of the Fund’s investments will affect the volatility of the Fund’s share price.
Risks of sovereign debt include the relative size of the debt burden to the economy as a whole and the government debtor’s policy towards the International Monetary Fund and the political constraints to which a government debtor may be subject.
Sub-sovereign government bonds represent the debt of state, provincial, territorial, municipal, local or other political sub-divisions, including other governmental entities or agencies, other than sovereign governments. In addition to sovereign debt risk, risks of investing in sub-sovereign debt include the fact that such investments may or may not be issued by, or guaranteed as to principal and interest by, the sub-sovereign’s larger sovereign entity.
The Fund may invest in obligations issued or guaranteed by supranational entities, which may include, for example, entities such as the International Bank for Reconstruction and Development (the World Bank). If one or more shareholders of a supranational entity fails to make necessary additional capital contributions, the entity may be unable to pay interest or repay principal on its debt securities, and the Fund may lose money on such investments.
Preferred securities may be less liquid than many other securities, and in certain circumstances, an issuer of preferred securities may redeem the securities prior to a specified date.
Investments in preferred securities carry interest rate risk. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa.
Variable and floating-rate securities may be subject to liquidity risk, meaning that there may be limitations on the Fund’s ability to sell the securities at any given time. Due to their variable or floating-rate features, these securities generally will pay higher levels of income in a rising interest rate environment; however, there can be no guarantee that a dividend paid by a floating-rate security will increase as interest rates rise.
If the Fund owns a preferred security that is deferring or suspending payments of dividends, the Fund may be required to report the distribution on its tax returns, even though it may not have received any income. Moreover, in the event an issuer of preferred securities experiences economic difficulties, the issuer’s preferred securities may lose substantial value due to the reduced likelihood that the issuer’s board of directors will declare a dividend and the fact that the preferred securities may be subordinated to other securities of the same issuer.
Convertible securities are subject to the risks of both debt securities and equity securities. As with equity securities, declining common stock values may cause the value of the Fund’s investments to decline. A debt security tends to decrease in value when interest rates rise. Moreover, many convertible securities are subject to the same risks as lower rated debt securities.
Hybrid securities potentially are more volatile than traditional equity securities and may carry credit risk and liquidity risk.
Perpetual subordinated debt typically has lower credit ratings and lower priority than other obligations of an issuer during bankruptcy, presenting a greater risk for nonpayment, and increasing as the priority of the obligation becomes lower.
The Fund’s use of a representative sampling approach will result in its holding a smaller number of securities than are in the underlying Index, and may be subject to greater volatility.
Investing in securities of small and medium-sized companies may involve greater risk than is customarily associated with investing in large companies.
Invesco Distributors, Inc. is the distributor of the PowerShares Exchange-Traded Fund Trust II. PowerShares® is a registered trademark of Invesco PowerShares Capital Management LLC (Invesco PowerShares).
Invesco PowerShares and Invesco Distributors, Inc. are indirect, wholly owned subsidiaries of Invesco Ltd.
The NASDAQ LadderRite® 0-5 Year USD Corporate Bond Index is a trademark jointly owned by The NASDAQ OMX Group, Inc. and LadderRite Portfolios LLC and has been licensed for use for certain purposes by the Adviser. The Fund is not sponsored, endorsed, sold or promoted by The NASDAQ OMX Group, Inc., LadderRite Portfolios LLC or their affiliates (collectively referred to as the “Corporations”). The Corporations have not passed on the legality or suitability of, or the accuracy or adequacy of descriptions and disclosures relating to, the Fund.
Note: Not all products available through all firms or in all jurisdictions.
Shares are not individually redeemable and owners of the Shares may acquire those Shares from the Funds and tender those shares for redemption to the Funds in Creation Unit aggregations only, typically consisting of 50,000, Shares.
An investor should consider the Fund’s investment objective, risks, charges and expenses carefully before investing. The prospectus contains this and other information about the Fund. For this and more complete information about the Fund call 800 983 0903 or visit invescopowershares.com for a prospectus. Please read the prospectus carefully before investing.