PowerShares Capital Management LLC, the firm created by a former Nuveen Investments Inc executive, has announced the launch of the PowerShares Dynamic Market Portfolio. The funds, which will update their holdings on a quarterly basis, are designed to replicate the American Stock Exchange’s (AMEX) Dynamic Portfolio Intellidex indices, according to a Dow Jones report.
The tracking of the AMEX indices is done through quantitative analysis to select stocks based on their growth potential. Both indices are comprised of 100 large, medium-sized and small companies with sector weightings similar to the broader US stock market. The indices may experience component turnover of 50% to 150% a year, meaning 25 to 40 stocks in each fund may change every quarter.
To cover the costs, the funds will carry a management fee of 60 basis points. Looking over the previous three years, tracking the Dynamic Market Intellidex would have returned a negative 0.8% annually, compared with a negative 15.7% for the S&P 500.
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