TORONTO, July 21, 2014 /CNW/ - The appetite for fixed-income investments remains strong among Canadian investors despite a prolonged period of record-low yields. When interest rates eventually rise, many Canadian fixed-income investors may be surprised by the negative effect on their portfolios.
Historically, a laddered bond strategy has helped reduce the risks associated with rising interest rates, but managing a fixed-income portfolio requires expertise.
PowerShares Canada today announced the listing of two new smart beta exchange-traded funds (ETFs) on the Toronto Stock Exchange (TSX). Both ETFs have now closed the initial offerings of units and will be available for trading on TSX when the market opens today.
"As an innovator in the Canadian ETF market, PowerShares Canada recognizes the value of smart beta investment strategies," said Michael Cooke, Head of Distribution, PowerShares Canada. "Our new additions provide investors with intelligent access to short-term fixed-income investments."PowerShares 1-3 Year Laddered Floating Rate Note Index ETF (PFL) seeks to replicate, before fees and expenses, the performance of the FTSE TMX Canada 1-3 Year Laddered Floating Rate Note Index. The index is designed to give investors exposure to a laddered basket of Canadian government and corporate investment-grade floating-rate notes. PFL has a low management fee of just 0.20%. PowerShares LadderRite U.S. 0-5 Year Corporate Bond Index ETF (USB/USB.U) seeks to replicate, before fees and expenses, the performance of the NASDAQ LadderRite 0-5 Year USD Corporate Bond Index. The index is designed to give investors exposure to a laddered basket of U.S.-dollar-denominated, investment-grade corporate bonds. USB has a low management fee of 0.25%. The ticker symbol "USB" represents Canadian-dollar-denominated units, while "USB.U" represents U.S.-dollar-denominated units. "The low interest rates paid on government bonds makes short-term U.S. corporate debt and floating-rate notes quite attractive to investors seeking yield," Cooke said. "Both the laddering structure and the short duration of the underlying securities help reduce interest-rate sensitivity."