LDRI expands Invesco PowerShares existing lineup of low duration income exchange-traded funds (ETFs). As the newest addition to its smart beta fixed-income lineup, PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI) employs an equal weighted annual maturity ladder strategy that may help investors potentially mitigate interest rate risk while generating income.
“In today’s low-rate environment, investors continue to be wary of interest rate risk in their pursuit of investment income,” says Dan Draper, Invesco PowerShares’ global head of ETFs. ”LDRI provides what we view as a more intelligent solution to help investors address this ongoing challenge compared to many existing fixed-income solutions in the marketplace.”
A survey by Russell Investments found, across North America and Europe, asset owners’ use of smart beta indexes and smart beta index-based investment strategies is diverse, from use as market benchmarks to tools to control unwanted exposures or to emphasize certain investment factors in global multi-asset portfolios.
LDRI tracks the NASDAQ LadderRite 0-5 Year Corporate Bond Index, providing access to investment-grade, fixed coupon, U.S.dollar-denominated bonds issued by companies in the U.S., Canada, Western Europe and Japan. Bonds included in the index have an investment-grade rating from Fitch, Moody’s or S&P, a minimum outstanding of $500 million, and five years or less to maturity. The laddering methodology evenly staggers bond maturities so that they occur on regular intervals, providing an efficient balance between risk and return, which may help investors manage volatility during a period of rising interest rates.
“One of the differentiating features of LDRI is the patent-pending rebalancing process used in its underlying LadderRite Index,” says Joseph Becker, Fixed Income Product Strategist at Invesco PowerShares. “The Index will generally hold bonds to maturity. This feature, combined with its unique rebalancing methodology can help to reduce the trading requirements associated with index reconstitutions, potentially providing more efficient access for investors.”
To learn more about the PowerShares LadderRite 0-5 Year Corporate Bond Portfolio (LDRI), visit www.PowerShares.com/portal/site/us/investors/etfs/featured-funds/LDRI.