Invest In Century-Old Companies With The New NYSE ETF

ETFsU.S. markets stole the show in 2013, as broad benchmarks had one of their best years in recent memory. The S&P 500 added over 30% on the year, while small caps performed even better than that.

Thanks to this solid economic environment, and hopes for more gains this year, ETFs targeting the U.S. economy have been seeing solid inflows as of late. In fact, over the past year, more than $117 billion has flowed into U.S. equity funds (per data from XTF.com), showcasing how much interest there has been in American-focused investments.

With these kind of inflows, it shouldn’t be too surprising to note that some ETF issuers have put out new funds targeting the U.S. market in recent months. While many of these funds are ‘me-too’ products, there are still a few novel funds hitting the market, even in the crowded U.S.-equity space.

In particular, the latest addition from PowerShares, the NYSE Century Portfolio—trading under the symbol of NYCC—could be an interesting (and safe) way for investors to play the broad U.S. market. We have highlighted some of the key details below regarding this new fund, and how this product might be a solid way for some investors to use it to establish broad market U.S. exposure:

NYCC ETF in Focus

NYCC tracks the NYSE Century Index, a benchmark of companies that have been incorporated in the U.S. for at least 100 years. Firms also must be listed on major US exchanges, and have a market capitalization of at least $1 billion.

This approach is designed to give exposure to some of the largest and oldest public companies in the United States. The technique could also tilt towards safer companies that have endured both recessions and boom periods, and seem poised to survive the next round of trouble as well (see Play Safe with These 3 ETFs).

“The PowerShares NYSE Century Portfolio invests in household names that have defined the American economy for more than a century,” said Martin L. Flanagan, president and CEO of Invesco. “We believe NYCC offers investors targeted exposure to companies that have demonstrated the ability to innovate, transform and grow through decades of varying economic cycles, political conditions and social change.”

The fund is a bit pricey though, as its expense ratio comes in at 50 basis points a year. This is far higher than what many other U.S. market ETFs charge, and considering that there is only an annual rebalancing—and probably minimal turnover—it does look to be a profitable fund for PowerShares should the assets under management increase.

NYCC Holdings

In a bit of a surprise, the fund does hold nearly 375 companies, so there is apparently a pretty large basket of century-old firms out there. Additionally, just 30% of its portfolio is in large caps, so there are quite a large number of mid and small cap securities that have stood the test of time.

Financials take the top spot in terms of a sector allocation, at just under 24% of assets. This is closely followed by industrials at 20%, and then both the consumer sectors and utilities take up roughly 10% of NYCC as well.

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