Invesco PowerShares Expands Fundamental Fixed-Income Line With Emerging Market
Local Currency Sovereign Debt Portfolio
CHICAGO, IL -- (Marketwired) -- 05/09/13 -- Invesco PowerShares
Capital Management LLC, a leading global provider of exchange-traded
funds (ETFs), announced today the launch of the PowerShares
Fundamental Emerging Markets Local Debt Portfolio (PFEM) on the NYSE
PFEM is designed to provide investors fundamentals-weighted exposure
to emerging market sovereign debt denominated in local currencies.
The Fund has an expense ratio of 0.50% and is expected to issue
"Emerging market sovereign debt represents an attractive asset class
potentially offering investors higher yields and lower debt to GDP
ratios relative to most developed markets," said Andrew Schlossberg,
head of US distribution & global ETFs. "Consistent with our
leadership position in providing a value-added approach, the
PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM)
is the first ETF to provide investors a fundamentals-weighted
exposure to emerging market sovereign debt denominated in local
Traditional bond indexes generally use some form of market-cap
weighting where constituent weights are a function of both the amount
of debt issued and the debt's current price. This approach can result
in greater weights being assigned to issuers that have issued more
debt. In contrast, the Fundamental Index(R) approach developed by
Research Affiliates, LLC weights bonds based on each country's
economic footprint, resulting in a portfolio that is correlated to a
country's debt service capacity.
"Weighting by fundamentals gives higher portfolio weights to issuers
with lower leverage and better debt service capacity, resulting in
generally lower credit risk compared to the cap-weight benchmark,"
said Shane Shepherd, senior vice president and head of fixed-income
research at Research Affiliates, LLC. "In addition, a regular
rebalance back to fundamental weights takes advantage of potential
market inefficiencies in credit spreads by buying cheaper bonds and
selling more expensive ones," Mr. Shepherd said.
"The PowerShares Fundamental Emerging Markets Local Debt Portfolio
(PFEM) expands our Fundamentals Weighted fixed-income lineup which
currently includes ETFs targeting the High Yield (PHB) and Investment
Grade Corporate (PFIG) markets," added Lorraine Wang, Invesco
PowerShares senior vice president of new product development. "We
believe the PowerShares suite of Fundamentals Weighted fixed-income
ETFs provides investors an attractive alternative to cap-weighted
-- PowerShares Fundamental Emerging Markets Local Debt Portfolio (PFEM)
-- PowerShares Fundamental High Yield(R)Corporate Bond Portfolio (PHB)
-- PowerShares Fundamental Investment Grade Corporate Bond Portfolio
The PowerShares Fundamental Emerging Markets Local Debt Portfolio
(PFEM) is based on the Citi RAFI Bonds Sovereign Emerging Markets
Extended Local Currency Index (Index). The Fund generally will invest
at least 80% of its total assets in bonds that comprise the Index.
The Index measures the potential return of a portfolio of bonds
issued by the national governments of 18 emerging market countries,
all in the respective local currency. To qualify for the Index,
countries must have at least a minimum domestic sovereign debt rating
of "CC" by S&P and "Ca" by Moody's. Research Affiliates, LLC and
Citigroup Index LLC jointly select the emerging market countries in
the Index and country weights are determined once per year based on
the RAFI methodology. The Fund and the Index are rebalanced
As of April 30, 2013, the Index included bonds issued by the national
governments of Brazil, Chile, China (Offshore), Colombia, the Czech
Republic, Hungary, Indonesia, Israel, Malaysia, Mexico, Peru, the
Philippines, Poland, Russia, South Africa, South Korea, Thailand and
A credit rating is an assessment provided by a nationally recognized
statistical rating organization (NRSRO) of the creditworthiness of an
issuer with respect to debt obligations, including specific
securities, money market instruments or other debts. Ratings are
measured on a scale that generally ranges from AAA (highest) to D
(lowest); ratings are subject to change without notice. NR indicates
the debtor was not rated, and should not be interpreted as indicating
low quality. For more information on rating methodologies, please
visit the following NRSRO websites: www.standardandpoors.com and
select 'Understanding Ratings' under Rating Resources on the
homepage; www.moodys.com and select 'Rating Methodologies' under
Research and Ratings on the homepage.
Invesco PowerShares Capital Management LLC is Leading the Intelligent
ETF Revolution(R) through its family of more than 140 domestic and
international exchange-traded funds, which seek to outperform
traditional benchmark indexes while providing advisors and investors
access to an innovative array of focused investment opportunities.
With franchise assets over $77 billion as of March 31, 2013,
PowerShares ETFs trade on both US stock exchanges. For more
information, please visit us at invescopowershares.com or follow us
on Twitter @PowerShares.
Invesco, Ltd. Is a leading independent global investment management
firm, dedicated to helping investors worldwide achieve their
financial objectives. By delivering the combined power of our
distinctive investment management capabilities, Invesco provides a
wide range of investment strategies and vehicles to our retail,
institutional and high net worth clients around the world. Operating
in more than 20 countries, the firm is listed on the New York Stock
Exchange under the symbol IVZ. Additional information is available at
There are risks involved with investing in ETFs, including possible
loss of money.
Shares are not actively managed and are subject to
risks including those regarding short selling and margin maintenance
requirements. Ordinary brokerage commissions apply.
Investments in fixed-income securities, such as notes and bonds,
carry interest rate and credit risk. Interest rate risk refers to the
risk that bond prices generally fall as interest rates rise and vice
versa. Credit risk is the risk of loss on an investment due to the
deterioration of an issuer's financial health.
Sovereign debt securities are subject to the additional risk that --
under some political, diplomatic, social or economic circumstances --
some developing countries that issue lower quality debt securities
may be unable or unwilling to make principal or interest payments as
they come due. The fund may have limited legal recourse against the
issuer and/or guarantor of sovereign debt when default occurs. As a
holder of government debt, the Fund may be requested to participate
in the rescheduling of such debt and to extend further loans to
Government obligors in emerging market countries are among the
world's largest debtors to commercial banks, other governments,
international financial organizations and other financial
institutions. The Fund invests in the bonds of governments located in
emerging market countries and much of the income received by the Fund
will be in foreign currencies.
Much of the income received by the Fund will be in foreign
currencies. Because the Fund's net asset value (NAV) is determined in
US dollars, the Fund's NAV could decline if the currency of the
non-US markets in which the Fund invests depreciate against the US
The Fund may invest in non-investment grade, or high-yield,
securities (junk bonds). High-yield securities have additional risks,
including interest rate changes, decreased market liquidity and a
larger amount of outstanding debt than investment grade securities.
There are additional risks involved in writing (selling) covered call
options. The Fund, by writing covered call options on this Index,
will give up the opportunity to benefit from potential increases in
the value of the index stocks above the exercise prices of the
options, but will continue to bear the risk of declines in the value
of the Index.
The Fund will invest in foreign bonds and, because foreign exchanges
may be open on days when the Fund does not price its shares, the
value of the non- U.S. securities in the Fund's portfolio may change
on days when you will not be able to purchase or sell your Shares.
The Fund's use of a representative sampling approach will result in
its holding a smaller number of securities than are in the underlying
Index, and may be subject to greater volatility.
The Fund currently intends to effect creations and redemptions
principally for cash, rather than principally in-kind because of the
nature of the Fund's investments. As such, investments in the Fund
may be less tax efficient than investments in ETFs that create and
The Fund is considered non-diversified and may be subject to greater
risks than a diversified fund.
Shares are not individually redeemable and owners of the shares may
acquire those shares from the Fund and tender those shares for
redemption to the Fund in Creation Unit aggregations only, typically
consisting of 100,000 shares.
Shares are not FDIC insured, may lose value and have no bank
PowerShares(R) is a registered trademark of Invesco PowerShares
Capital Management LLC (Invesco PowerShares). Invesco PowerShares and
Invesco Distributors, Inc. are indirect, wholly owned subsidiaries of
Invesco Ltd. Invesco Distributors, Inc. is the distributor of the
PowerShares Exchange-Traded Fund Trust II.
Citi and Citi and Arc Design are trademarks and service marks of
Citigroup Inc. or its affiliates and are used and registered
throughout the world. The Yield Book is a registered service mark of
The Yield Book Inc. and is registered in the U.S. and other
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logo, and the Research Affiliates corporate name and logo are the
exclusive intellectual property of Research Affiliates, LLC and are
registered trademarks in the U.S. and other countries. Any use of
Research Affiliates, LLC's trade names and logos without the prior
written permission of Research Affiliates, LLC is expressly
prohibited and Research Affiliates, LLC reserves the right to take
any and all necessary action to preserve all of its rights, title and
interest in and to these marks. Fundamental Index(R), the
non-capitalization method for creating and weighting of an index of
securities, is patented and patent-pending proprietary intellectual
property of Research Affiliates, LLC.
An investor should consider the Fund's investment objective, risks,
charges and expenses carefully before investing. For this and more
complete information about the Fund call 800 983 0903 or visit
invescopowershares.com for a prospectus. Please read the prospectus
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