Products May 1, 2014

Invesco Launches Variable Rate Preferred Portfolio

Invesco PowerShares Capital Management has launched the PowerShares Variable Rate Preferred Portfolio (VRP).
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The aim of this portfolio will be to provide income-seeking investors with efficient exposure to a portfolio of variable-rate preferred securities.

“We see strong demand for variable-rate preferred securities that offer the potential for high income and less interest rate risk than fixed-rate preferred securities in this current market rate environment,” says Dan Draper, Invesco PowerShares managing director of global exchange-traded funds (ETFs), based in Chicago. “As a variable-rate preferred ETF, VRP is designed to help investors meet their risk and return objectives.”

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Draper explains that variable-rate preferred securities are typically issued at rates below fixed-rate preferred securities of similar quality, in exchange for the issuer bearing most of the risk for changes in interest rates. In the rising interest rate environment, Invesco expects that their risk/reward profile and tendency to trade on a yield-to-call basis may provide variable-rate preferred securities the potential to outperform the fixed-rate preferred market. Typically, variable-rate preferred securities exhibit less sensitivity to interest rate movements than preferred securities, which is an important feature for investors interested in building a more diversified fixed-income portfolio.

Invesco’s VRP portfolio is based on the Wells Fargo Hybrid and Preferred Securities Floating and Variable Rate Index. The fund will generally invest at least 90% of its total assets in the preferred securities that comprise the index. The index is a market capitalization-weighted index designed to track the performance of preferred stock, as well as certain types of “hybrid securities” that are functionally equivalent to preferred stock and that pay a floating or variable rate dividend or coupon. The fund and the index are rebalanced monthly.

“The Wells Fargo Hybrid and Preferred Securities Floating and Variable Rate Index is designed to track a unique segment of the preferred market that offers both significant income potential and reduced interest-rate sensitivity,” says Daniel Forth, head of strategic indexing at Wells Fargo, based in Charlotte, North Carolina. “We are excited to partner once again with Invesco PowerShares to meet the needs of today’s investors.”

More details about the PowerShares Variable Rate Preferred Portfolio can be found here.

Products May 1, 2014

Envestnet Revamps Impact Investing Tool

Envestnet, Inc. has enhanced the capabilities of its Impact Investing Solutions platform, through which retirement plan clients can develop socially responsible investing (SRI) programs.
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Envestnet, a provider of integrated wealth management technology and services for investment advisers and wealth managers, is now offering these impact investment services through its portfolio management consultants business, Envestnet/PMC.

This new impact investing program provides financial advisers and institutions with access to a comprehensive set of model portfolios, specialist advice and digital SRI portfolio-building tools.

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“For advisers to truly support their clients, they must increasingly align investors’ wealth with their worldview,” says Lori Hardwick, executive vice president of Envestnet advisory services, based in Chicago. “Investors now realize that the way they direct capital can impact the world and people around them. This is especially true with younger investors, and advisers are experiencing much greater demand for impact investing solutions that meet a variety of customized investment mandates.”

As an open-architecture program, Impact Investing Solutions is available to all advisers and can be integrated and branded within any advisory practice. MSCI ESG Research, which provides in-depth fund research, ratings and analysis of the social, environmental and governance-related business practices of thousands of companies, offers additional resources as a partner in this initiative.

The revamped tool includes17 well-defined personal conviction portfolio “screens” that can be applied to managed accounts run by traditional and impact investment specialists. These refined screens, which filter out holdings that do not match up with the portfolio’s SRI goals, support advisers in addressing a diverse set of client issues, including community development, affordable housing, climate change, fossil fuel limitation, worker safety, women’s empowerment and numerous other customized investment mandates.

More information on Envestnet can be found here.

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