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An ETF Mr. Burns Would Love

NEW YORK (TheStreet) -- Mr. Burns, the plutocrat from The Simpsons, didn't get rich by investing in newfangled companies.  He is more of a traditionalist. On the show, his portfolio included Transatlantic Zeppelin and Amalgamated Spats. These old-fashioned companies seem silly, but Mr. Burns may have had an innovative idea there: invest in longstanding companies. 

Now there's an ETF for that.

The new PowerShares NYSE Century Portfolio (NYCC) owns companies that are household names and have been in business for at least 100 years.

That doesn't mean that the companies have been publicly traded for 100 years, though. For example, UPS (UPS) has been in business since 1907, but its stock has only been trading since 1999.

The implication of course is that the companies' ability to weather the last century likely means they will do well in the current one.

The PowerShares Century ETF is not a simple market cap-weighted index fund. PowerShares was an early mover in "smart beta" funds, which screen a broad-based index for stocks that meet a valuation metric or some other attribute like volatility or a dividend strategy. NYCC is one such smart beta fund.

The Century ETF also employs an equal weighting strategy. In other words, instead of holding its stocks based on their market cap (basically their size), it buys equal amounts of each of its stocks, regardless of valuation. PowerShares says that "helps the portfolio potentially avoid overweighting overvalued companies and underweighting underpriced companies." The company also notes that equal weighting allows the smaller companies to contribute more to the fund's performance.

More than half of NYCC is in small and mid-cap stocks, which is surprising. Most investors would probably assume a fund like this would be dominated by mega caps like Johnson & Johnson (JNJ) and Procter & Gamble (PG). While those names are in the fund, the equal weighting also allows room for companies that investors might not realize have been trading for so long.

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