PowerShares Capital Management has been one of the big success stories in the ETF space, and the company continues to impress.
The latest example came Thursday, when the Illinois-based firm, a division of
, announced plans to take over sponsorship of the
Nasdaq 100 Trust
-- the most actively traded exchange-traded fund on the market -- in addition to five other ETFs from Nasdaq Global Funds.
Adding the products to the PowerShares
roster will not only give a major boost to the company's reputation -- in one fell swoop, the deal is expected to expand PowerShares' assets more than threefold.
"For as many great products as we have,
this really gives us some visibility within the marketplace and credibility as a major ETF provider," says PowerShares President Bruce Bond. "To have the most-traded security in the world be a PowerShares is an important thing."
PowerShares is currently the No. 2 company in terms of ETFs on the market. But with about $7.5 billion in assets, it has had to play catch-up with companies such as
Barclays Global Investors
State Street Global Advisors
, all of which have more assets under management.
The company has so far done a solid job, but with this deal, catching up to the big players will get easier.
If the transaction closes -- it requires approval from regulatory agencies -- PowerShares' assets will jump by more than $19 billion to about $26.5 billion. (That's not accounting for normal asset growth.)
The companies are not disclosing the financial terms of the deal.
But PowerShares isn't the only one that stands to make out well from this transaction. There also are some solid benefits for the
Nasdaq Stock Market
"It's a real win-win for both Nasdaq and PowerShares," says Bond, who adds that the ETFs "will get more visibility and we'll be able to educate investors on how to use it as part of a portfolio."
A spokesman from Nasdaq, who asked not to be named, agrees, saying, "We don't have a distribution network like PowerShares has. We transferred the sponsorships because PowerShares has a very strong distribution network and we thought it was certainly the right thing to do."
In addition, he says, "The investor base will hopefully grow as a result of the transfer of these products to PowerShares."
There's another benefit for Nasdaq -- cost savings.
According to the Nasdaq spokesman, transferring the sponsorships to PowerShares also means transferring the costs associated with the sales distribution channel, and marketing and administrative expenses. These were all factored into the decision, he says.
In a press release, John Jacobs, chief executive of Nasdaq Global Funds, commented on the deal, saying, "PowerShares has a strong track record of providing compelling portfolios and investment tools for advisers and investors."
"The addition of these successful investment products to PowerShares' family of exchange-traded funds (ETFs) underscores their commitment to sound portfolio construction and investment management approaches," he said. "This decision is another important step to elevate Nasdaq's growing and significant leadership in the equification of America."
The other ETFs that PowerShares will be assuming sponsorship of are the European version of the QQQQ, the
Nasdaq 100 European Tracker
and four BLDRs -- ETFs that are based on the Bank of New York ADR Indexes: the
BLDRs Emerging Markets 50 ADR Index Fund
BLDRs Developed Markets 100 ADR Index Fund
BLDRs Europe 100 ADR Index Fund
BLDRs Asia 50 ADR Index Fund
Neither the total expense ratios of these products or the tickers are expected to change as a result of the transaction, Bond says.
Securities and Exchange Commission
has jurisdiction over the sponsorship transfer of the Nasdaq 100 ETF and the BLDRs, and the Nasdaq 100 European Tracker needs the nod from the Irish Financial Services Regulatory Authority. In the press release, the companies said they expect both transactions to be completed by June 30 next year.