smart beta investing: how to build a portfolio the smart ... · november 12, 2014 smart beta...
TRANSCRIPT
NOVEMBER 12, 2014
Smart Beta Investing: How to
Build a Portfolio the "Smart"
Beta Way
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TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.
© 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
NOVEMBER 12, 2014
Important Disclosures
Carefully consider the investment objectives, risks, charges and expenses before investing in an ETF (Exchange Traded Fund). A
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before investing.
ETFs can entail risks similar to direct stock ownership, including market, sector, or industry risks. Some ETFs may involve international risk, currency risk, commodity risk, and interest rate risk. Trading prices may not reflect the net asset value of the underlying securities. Commission fees typically apply. Stock investments are subject certain risks such as market risk, price volatility and liquidity risk. Past performance of a security, strategy or index is no guarantee of future results or success.
The material, views and opinions expressed in this presentation are solely those of the presenter and may not be reflective of those held
by TD Ameritrade, Inc.
The webcast is provided for general information purposes only and should not be considered an individualized recommendation or advice.
TD Ameritrade makes no representations or warranties with respect to the accuracy or completeness of the information provided.
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NOVEMBER 12, 2014
Speaker
John Feyerer, CFA VP, ETF Product Management
Global ETF Products & Research
Invesco Powershares Capital Management LLC
Oversees Invesco PowerShares’ product
management functions, including developing and
implementing strategies and tactics for product
positioning and coordinating product-related
marketing
Prior to joining Invesco PowerShares, John served in
a variety of operating, financial, and strategic roles
over 14 years at the ServiceMaster Company
Earned his BA/MA in Communications from Wheaton
College and an MBA with a concentration in Finance
from Layola University Chicago
Is a Chartered Financial Analyst charterholder and a
member of the CFA Society of Chicago
Smart Beta ETF Strategies Expanding the Investor Toolbox
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NOT FDIC INSURED|MAY LOSE VALUE| NO BANK GUARANTEE
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Expanding the Investor Toolbox
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Decoding the “Buzz”
The (R)evolution of Smart Beta Strategies
Portfolio Implementation Ideas
Accessing Low-Volatility Strategies
The Fundamental Index Approach
Seek a High-Conviction Management Firm
Important Information
Beta: is a measure of risk representing how a security is expected to respond to general market movements. Smart Beta: an alternative and selection index based methodology that may outperform a benchmark or mitigate portfolio risk, or both.
Expanding the Investor Toolbox Decoding the “Buzz”
Expanding the Investor Toolbox Decoding the “Buzz”
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“Once you get past the moniker, some very intelligent people are doing some very interesting things that intersect the world of active and passive investing.” Jerry Kerns Editor-in-Chief, Morningstar Magazine
“The New Game” Morningstar Magazine, April/May 2014
Formulaic based on predetermined
rules
Expanding the Investor Toolbox Decoding the “Buzz”
What is Smart Beta? “The common thread among [smart beta ETFs] is that they seek to either improve their return profile or alter their risk profile relative to more traditional market benchmarks.” 1
– Ben Johnson, Director of Passive Funds Research, Morningstar
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1 Source: “The Strategic Factor of Smart Beta” Morningstar Magazine, April/May 2014 Beta is a measure of risk representing how a security is expected to respond to general market movements. Smart Beta represents an alternative and selection index based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk.
COMMON DEFINITIONS FOR SMART BETA ETFS
Not market-cap weighted
Can track a variety of factors
Also Known As:
Alternative Beta
Alternative Indexing
Strategic Beta
Expanding the Investor Toolbox Decoding the “Buzz”
Origins of Indexing
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Information shown is for educational purposes and should not be deemed as a recommendation to buy or sell a specific product. 1 S&P Dow Jones Indices, djindexes.com 2)Vanguard, vanguard.com 3) State Street Global Advisors, spdrs.com An investor cannot invest directly in an index.
The Dow Jones Industrial AverageSM was created in 18961
- “Microcosm of the U.S. stock market”
- Intended to serve as a mathematical construct
The first index fund launched in 19762
Vanguard S&P 500 Index Fund
The first ETF launched in 19933
SPDR S&P 500 ETF
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Expanding the Investor Toolbox Decoding the “Buzz”
Growth of Index-Based Investing
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1) Source: “The New Indexing,” Barron’s, April 5, 2014 most recent data available 2) Bloomberg, L.P. as of Aug. 30, 2014 the most recent data available. 3) S&P Dow Jones Indices, djindexes.com 4) Guggenheim , Guggenheim.com 5)Vanguard, vanguard.com 6) State Street Global Advisors, spdrs.com. An investor cannot invest directly in an index.
1890s 1900s 1910s 1920s 1930s 1940s 1950s 1960s 1970s 1980s 1990s 2000s 2010s
First Price-Weighted Index3
First Index Mutual Fund (1976)5
First ETF (1993)6
First Cap-Weighted Index (1923)3
First Smart Beta ETF (2003)4
$1.8 trillion in index-based mutual funds today1
Next phase: ETFs currently represent $1.7 trillion in index-based investments2
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Expanding the Investor Toolbox Decoding the “Buzz”
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Beta: is a measure of risk representing how a security is expected to respond to general market movements. Smart Beta: an alternative and selection index based methodology that may outperform a benchmark or mitigate portfolio risk, or both. *Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. There is no assurance that an investment strategy will outperform or achieve its investment objectives.
1 Liquidity: 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 50,000, 75,000, 100,000 or 200,000 shares. 2Low Cost: Since ordinary brokerage commissions apply for each buy and sell transaction, frequent activity may increase the cost of ETFs. 3Transparency: ETFs disclose their holdings daily.
Focused on Meeting Client Investment Objectives
Employing Features of Both Worlds:
May outperform a benchmark*
Replicates an index with rules-based methodology
Provides broad market exposure
Ability to potentially reduce risk through diversification beyond a single security
Liquidity1
Lower costs2
Transparency3
Passive cap-weighted
Active Smart Beta Smart Beta
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Enhanced Beta Led by High-Conviction Management Firm
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Smart Beta Active Traditional Beta
Classic Beta
(S&P 500)
Style Beta (Russell 2000
S&P 500 Value)
Access (Commodity, Alternatives)
Multi-Factor or Alternatively
Weight (Fundamental)
Single Factor (Low
Volatility High Beta)
Alpha (Active
Management)
Systematic Risk Active Returns
Activ
e R
isk
Expanding the Investor Toolbox Decoding the “Buzz”
Multi-Factor or Alternatively
Weight (Fundamental)
Single Factor (Low Volatility,
High Beta)
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For illustrative purposes only.
Expanding the Investor Toolbox The (R)evolution of Smart Beta Strategies
Expanding the Investor Toolbox The (R)evolution of Smart Beta Strategies
Global Financial Crisis Created the Need for a Evolved Investment Vehicle
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1 Liquidity: 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 50,000, 75,000, 100,000 or 200,000 shares. 2 Transparency: ETFs disclose their holdings daily. 3 Cost: Since ordinary brokerage commissions apply for each buy and sell transaction, frequent activity may increase the cost of ETFs. 4 Tax Efficiency is a measure of performance for an investment or a fund that is calculated by dividing the after-tax return by the pre-tax return. Invesco PowerShares does not offer tax advice. Please consult your own tax advisor for information regarding your own tax situation.
The Global Financial Crises Created:
Extreme market uncertainty
Record-high volatility
Sharp portfolio drawdowns
Steep capital gain tax consequences
Coming out of 2008, many of our clients have placed a renewed emphasis on:
Tactical asset allocation (vs. buy & hold strategic asset allocation)
Intraday liquidity1
Daily transparency2
Cost3
Tax efficiency4
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Expanding the Investor Toolbox The (R)evolution of Smart Beta Strategies
Global Financial Crisis Created the Need for a Evolved Investment Vehicle
Investor concerns heightened over both active management and traditional passive exposure.
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Active Management
Frustrated with costs
Disappointed in performance
Jilted by lack of downside protection
Market Cap Indexes
Concentrated in overvalued stocks
Underweighted in undervalued stocks
Overexposed to the most indebted companies
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Expanding the Investor Toolbox The (R)evolution of Smart Beta Strategies
Smart Beta Fastest-Growing ETF Segment
Nonmarket-cap-weighted ETFs captured over 29% of the U.S. ETF equity inflows in 2013, despite representing only 19% of the assets.1
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1 Source: Bloomberg L.P. as of Dec. 31, 2013. Most recent annual data available. 2 Total smart beta exposure for Towers Watson clients in 2012. Towers Watson, “Understanding smart beta,” July 2013 3 Source: Financial Times, “Smart beta funds eye $5tn windfall”, July 14, 2013
“Towers Watson* clients already have $20 billion of assets invested in smart beta strategies.” *Towers Watson is a global consulting firm. Clients referenced are institutional clients. 2
“ ‘There is a good chance 30% of equity allocations will end up in smart beta products.’” The article underscores that an understanding of the diversity across smart beta funds is essential, and if ‘strategies fail to deliver in the long term, investors will withdraw.’”3
29%
71%
19%
81%
Non-Market Cap Market Cap v v
2013 ETF Industry AUM 2013 ETF Industry Flows
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Expanding the Investor Toolbox The (R)evolution of Smart Beta Strategies
Cap Weighting: Unintended Biases Exist
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An investor cannot invest directly in an index. Past performance is not indicative of future results.
ETFs, in and of themselves, do not qualify as diversified investment strategies. Diversification does not ensure a profit or protect against loss.
Source: Bloomberg L.P., FactSet as of June 30, 2014
Did U.S. equity investors intend to increase their exposure to Technology by 70% during the tech bubble?
0%
5%
10%
15%
20%
25%
30%
35%
3/1/99 9/1/99 3/1/00 9/1/00 3/1/01
% T
ech
nolo
gy i
n S
&P
50
0
Tech Exposure Grew from 19% to 33% in Just One Year
% Technologyin S&P 500
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Expanding the Investor Toolbox The (R)evolution of Smart Beta Strategies
Headlines Reflect Shift to Smart Beta
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“The New, Improved ETFs: How Smart is Smart Beta?”
Cover Story: Barron’s, May 10, 2014
“All Hail the New King: The Rise of ‘Smart’ Index Funds”
Cover Story: Barron’s, April 5, 2014
“The Strategic Factor of Smart Beta”
Cover Story: Morningstar Magazine, April/May 2014
“Index Funds that Just Might Beat the Market: Investors Have Put Billions into ‘Smart Beta’ Funds over the Past Year”
The Wall Street Journal, Nov. 8, 2013
Maybe gradation of color background?
Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. There is no assurance that an investment strategy will outperform or achieve its investment objectives.
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53% 46% 1%
48% 38% 14%
42% 55% 4%
13% 77% 10%
Smart Beta ETFs
Market-Cap Weighted ETFs
Actively Managed ETFs
Leveraged/Inverse ETFs
Increase Remain the Same Decrease v v v
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Source: Cogent Research, ETF Thought Leadership: Identifying ETF Investment Strategies & Needs Among Institutional Investors As of October 11, 2013. See slide 46 for important information for Cogent Study.
Expanding the Investor Toolbox The (R)evolution of Smart Beta Strategies
Outlook for Institutional Use A majority of Institutional Decision Makers (IDMs) plan to increase use of ETFs and smart beta ETFs stand to grow at the highest rate.
Increase Remain the Same Decrease
v v v
Expected Change in ETF Usage in 12 Months Expected Change in the Next 3 Years
58%
40%
2%
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Source: Cogent Research, ETF Thought Leadership: Identifying ETF Investment Strategies & Needs Among Institutional Investors As of October 11, 2013. See slide 46 for important information for Cogent Study.
Institutions Plan to Increase Use of Smart Beta ETFs
6%
38%
44%
10%
7%
29%
46%
15%
9%
44%
38%
9%
Extremely likely Very likely Somewhat likely Not very likely Not at all likely v
v
v v
v
Total Institutional
Decision Makers
Institutional Investors < $500M Assets
Institutional Investors > $500M Assets
Low Volatility
High Dividend
Fundamental Weight
Equal Weight
High Beta
Other
67%
46%
34%
27%
19%
5%
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There is no assurance that an investment strategy will outperform or achieve its investment objectives. Source: Cogent Research, ETF Thought Leadership: Identifying ETF Investment Strategies & Needs Among Institutional Investors As of October 11, 2013. See slide 46 for important information for Cogent Study.
Only 4% believe
this
Institutions Reasons for Using Smart Beta ETFs
Expanding the Investor Toolbox The (R)evolution of Smart Beta Strategies
Outperforms Benchmark indexes
Diversification
Reduce volatility/beta
Alternative weighting of assets
Better asset risk return
Alternative strategy
Exposure to specific assets
Low cost
Other
31%
18%
18%
18%
13%
11%
7%
2%
9%
Reasons For Using
Primary Reasons for Using / Not Using Rules-Based/Smart Beta ETFs (Unaided)
Lack of familiarity
Lack of history/track record
No need
Not part of our investment strategy
Prefer active management
Not cost efficient
Don’t work consistently in different market conditions
Difficult for clients to understand
Considering it
Don’t think they work
Low volume/small funds
34%
12%
11%
10%
9%
6%
5%
4%
4%
4%
4%
Reasons For Not Using*
vs.
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Expanding the Investor Toolbox Portfolio Implementation
Expanding the Investor Toolbox Portfolio Implementation
Express Market Views, Fine Tune Exposures, or Diversify through Core and Satellite Positions
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Commodities and futures generally are volatile and are not suitable for all investors. For more specific definitions of these factors, please see the Glossary and Terms section at the end of this presentation.
1 Access 2 Single Factor
Strategies
3 Multi-Factor or
Alternatively Weighted Strategies
Commodities
Multi-Strategy Alternatives
Equity Hedge/Tail Risk
Other Alternatives
Low Volatility
Dividend
High Quality
Buyback
Momentum
High Beta
Fundamentals Weighted
Equal Weighted
Quantitative Strategies
Alternatively Weighted Fixed Income
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Index Proxies and Definitions for Information on Slides 22 and 23
Low Volatility is represented by S&P 500 Low Volatility Index which was incepted on Apr. 4, 2011. The S&P 500® Low Volatility Index is compiled, maintained and calculated by Standard & Poor's and consists of the 100 stocks from the S&P 500® Index with the lowest realized volatility over the past 12 months.
Fundamental is represented by FTSE RAFI US 1000 Index which was incepted on Nov. 28, 2005. FTSE RAFI US 1000 Index: is designed to track the performance of the largest US equities, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The 1,000 equities with the highest fundamental strength are weighted by their fundamental scores. An investment cannot be made directly into an index.
Dividend Growers is represented by NASDAQ US Broad Dividend Achievers Index which was incepted on Dec. 9, 2003. The NASDAQ US Broad Dividend AchieversTM Index is designed to identify a diversified group of dividend-paying companies.
Momentum is represented by Dorsey Wright Technical Leaders Index which was incepted on Jan. 9, 2007. The Dorsey Wright Technical Leaders Index includes approximately 100 US companies from a broad mid- and large-capitalization universe. The Index is constructed pursuant to Dorsey, Wright & Associates, LLC's proprietary methodology, which takes into account, among other factors, the performance of each of the approximately 1,000 largest companies in the eligible universe as compared to a benchmark index, and the relative performance of industry sectors and sub-sectors.
Buyback is represented by NASDAQ Buyback Achievers Index which was incepted on Nov. 9, 2006. The NASDAQ US BuyBack Achievers Index is comprised of US securities issued by corporations that have effected a net reduction in shares outstanding of 5% or more in the trailing 12 months.
High Quality is represented by S&P 500 High Quality Rankings Index
which was incepted on June 20, 2010. The S&P 500 High Quality Rankings Index is designed to provide exposure to the constituents of the S&P 500 Index that are identified as stocks reflecting long-term growth and stability of a company's earnings and dividends.
High Beta is represented by S&P 500 High Beta Index which was incepted on May 4, 2011. The S&P 500 High Beta Index is compiled, maintained and calculated by Standard & Poor's and consists of the 100 stocks from the S&P 500® Index with the highest sensitivity to market movements, or beta, over the past 12 months.
High Dividend is represented by S&P High Yield Dividend Aristocrats from its inception on Nov. 9, 2005 through Sept. 17, 2012 after which it is represented by S&P 500 High Dividend Index. The S&P High Yield Dividend Aristocrats Index is comprised of the 50 highest dividend yielding constituents of the stocks of the S&P Composite 1500 Index that have increased dividends every year for at least 25 consecutive years. The S&P 500 High Dividend Index is composed of 50 securities traded on the S&P 500 Index that historically have provided high dividend yields and low volatility.
Value is represented by Dynamic Large Cap Value Intellidex Index which was incepted on Dec. 9, 2003. Dynamic Large Cap Value Intellidex Index is designed to provide capital appreciation while maintaining consistent stylistically accurate exposure. The Style Intellidexes apply a rigorous 10 factor style isolation process to objectively segregate companies into their appropriate investment style and size universe.
Small Cap is represented by FTSE RAFI US 1500 Small-Mid Index which was incepted on May 4, 2006. FTSE RAFI US 1500 Small-Mid Index is designed to track the performance of small- and mid-capitalization equities of companies domiciled in the US.
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Source: Bloomberg L.P., since index inception shown as of September 30, 2014, the most recent data available. An investment cannot be made directly into an index. Index returns do not reflect any fees, expenses or sales charges. Nor do they represent fund performance. Please see the prior slide for index proxies and definitions. Please see slide 42 for index performance since inception. Past performance does not guarantee future results. Smart beta strategies may underperform cap-weighted benchmarks and increase portfolio risk. There is no assurance that an investment strategy will outperform or achieve its investment objectives.
Historically Shown to Capture Risk Premia
Smart Beta Excess Return Since Inception of Respective Index Launch
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Median Annualized Excess Return
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3.1%
-1.1%
1.6%
-4.7%
-0.3%
0.9%
0.3%
0.6%
1.2%
3.6%
-6.0% -5.0% -4.0% -3.0% -2.0% -1.0% 0.0% 1.0% 2.0% 3.0% 4.0%
Buyback
Dividend Growers
Fundamental
High Beta
High Dividend
High Quality
Low Volatility
Momentum
Small Cap
Value
Annualized Excess Return (Relative to S&P 500)
0.7 %
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Source: Bloomberg L.P., as of September 30, 2014 the most recent data available. An investment cannot be made directly into an index. Index returns do not reflect any fees, expenses or sales charges. Nor do they represent fund performance. Please see slide 21 for index proxies an d definitions. Please see slide 42 for standardized performance. Past performance does not guarantee future results. Smart beta strategies may underperform cap-weighted benchmarks and increase portfolio risk. There is no assurance that an investment strategy will outperform or achieve its investment objectives.
Q1 2012 Q2 2012 Q3 2012 Q4 2012 Q1 2013 Q2 2013 Q3 2013 Q4 2013 Q1 2014 Q2 2014 Q3 2014
High Beta 17.1%
Low Volatility 3.7%
High Beta 8.7%
High Beta 6.2%
Buyback 14.6%
Buyback 4.9%
Buyback 10.2%
High Beta 13.7%
High Dividend 4.9%
High Dividend 7.8%
S&P 500 1.1%
Momentum 14.2%
Dividend Growers
0.2%
Fundamental 6.4%
Small Cap 3.6%
High Dividend 13.4%
Small Cap 4.9%
Small Cap 10.2%
Buyback 10.7%
Low Volatility 3.3%
High Beta 7.2%
High Quality 1.1%
Small Cap 13.8%
Value 0.0%
Value 6.4%
Fundamental 2.2%
Value 13.2%
High Beta 4.2%
High Beta 8.9%
Fundamental 10.5%
Value 3.0%
Dividend Growers
5.4%
Value 1.0%
S&P 500 12.6%
High Dividend -0.9%
S&P 500 6.4%
Momentum 1.6%
Low Volatility 13.2%
Value 3.7%
Momentum 8.3%
Value 10.5%
Fundamental 2.5%
S&P 500 5.2%
Momentum 0.9%
Fundamental 11.4%
High Quality -1.6%
Dividend Growers
5.7%
High Quality 1.3%
Fundamental 12.8%
Fundamental 3.5%
High Quality 5.6%
S&P 500 10.5%
High Beta 2.2%
Low Volatility 5.2%
Buyback 0.3%
Buyback 11.0%
Buyback -2.6%
Small Cap 5.6%
Value 1.0%
Small Cap 12.1%
High Quality 3.0%
S&P 500 5.2%
Small Cap 9.8%
High Quality 1.8%
Fundamental 5.0%
Fundamental -0.1%
High Quality 10.1%
S&P 500 -2.8%
Buyback 5.6%
Buyback 0.3%
Dividend Growers 11.7%
S&P 500 2.9%
Fundamental 5.2%
High Quality 9.4%
S&P 500 1.8%
Value 4.9%
Dividend Growers -0.3%
Value 8.8%
Momentum -3.2%
High Dividend 5.2%
S&P 500 -0.4%
High Quality 11.3%
Momentum 1.2%
Dividend Growers
3.6%
Momentum 8.4%
Small Cap 1.6%
Momentum 4.7%
High Beta -0.3%
Dividend Growers
6.4%
Fundamental -3.2%
High Quality 4.9%
Low Volatility -0.9%
Momentum 10.7%
High Dividend 1.1%
Value 3.0%
Dividend Growers
8.1%
Momentum 1.6%
High Quality 4.1%
Low Volatility -1.0%
High Dividend 6.0%
Small Cap -4.9%
Momentum 4.3%
Dividend Growers -1.1%
S&P 500 10.6%
Dividend Growers
1.0%
Low Volatility 1.2%
Low Volatility 7.0%
Dividend Growers
1.4%
Buyback 3.5%
High Dividend -1.3%
Low Volatility 4.3%
High Beta -12.6%
Low Volatility 3.0%
High Dividend -1.6%
High Beta 9.5%
Low Volatility 0.9%
High Dividend 0.5%
High Dividend 5.2%
Buyback 1.4%
Small Cap 2.2%
Small Cap -6.5%
Difference Between Top- and Bottom-Performing Market Segments
12.9% 16.3% 5.8% 7.8% 5.1% 4.0% 9.7% 8.5% 3.6% 5.7% 7.7%
Factor Leadership Can Change Rapidly
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This does not constitute a recommendation of the suitability of any investment strategy for a particular investor. Investors should consult their Financial Advisors before making any investment decisions. Diversification does not ensure a profit or eliminate the risk of loss.
Core-Satellite Investing
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Expanding the Investor Toolbox Portfolio Implementation
Build a diversified core with single factor or multi-factor/alternatively weighted strategies
Tactically adjust market exposure based on market outlook with the objective of achieving portfolio out-performance
For illustrative purposes only.
Aggressive
Defensive
Opportunistic
Cautious
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Core-Satellite investing is a method of portfolio construction designed to balance expected risk and return in a portfolio by combining “core” strategies that seek to minimize portfolio volatility and costs with “satellite” strategies that seek to enhance portfolio returns compared to a benchmark. Satellite portfolio allocations generally fall into four strategies that seek to: resist general fluctuations in the market (defensive); dampen risks that may cause portfolio losses (cautious); selectively participate in market fluctuations that may enhance portfolio returns (opportunistic); fully participate in upward market swings that may enhance portfolio returns (aggressive).
This should not be construed as investment advice nor as a recommendation of a particular strategy or product. Consult with your financial advisor before making any investment decisions. There is no assurance that an investment strategy will outperform or achieve its investment objectives.
Expanding the Investor Toolbox Accessing Low-Volatility Strategies
Low-Volatility Strategies
Single Factor Low Volatility
Optimized Minimum-Variance
Equity Income
Fixed Income
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Accessing Low-Volatility Strategies Managing Volatility with Factor Driven Indexes
There is no assurance that such strategies will provide low volatility.
PowerShares S&P 500 Low-Volatility Portfolio
Key features:
Simple, transparent index methodology
Potential downside protection with upside participation1
Unconstrained sector exposure
Focused on the Least Volatile
SPLV Performance Attributes Since Inception (as of 9/30/14):
Seeking a Better Core: Accessing Low Volatility
Accessing Low-Volatility Strategies Managing Volatility with Factor Driven Indexes
Annualized Return Since
Inception (NAV 5/5/2011)
Volatility Sharpe Ratio
Up Capture
Down Capture
PowerShares S&P 500 Low Volatility Portfolio
13.9% 8.9% 1.55 72% 47%
S&P 500 Index 14.6% 11.9% 1.23 - -
Past performance does not guarantee future results. *Least volatile stocks receive the highest weight. 1 References to downside protection should not be construed as elimination of capital loss but rather as mitigation of capital loss versus a particular asset class or the market in general. Sources: Invesco PowerShares and Bloomberg L.P., May 5, 2011-Sept. 30, 2014, calculated monthly. Index returns do not represent fund returns. An investor cannot invest directly in an index. Please see important definitions, standardized performance and risk disclosures beginning at slide 40.
S&P 500 Parent Index
Least Volatile 20% of Stocks
Inverse Volatility
Weighted*
S&P 500 Low Volatility
Index
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For illustrative purposes only.
Mobility to Rotate In and Out of Sectors
31
Managing Volatility Using Factor-Driven Indexes
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Source: Invesco PowerShares and FactSet Research Systems, Inc. as of June 30, 2014. For Illustrative purposes only. Investors cannot invest directly in a basket of the 100 least volatile companies in the S&P 500 Index.
Expanding the Investor Toolbox The Fundamental Index Approach
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Expanding the Investor Toolbox The Fundamental Index Approach
Why a Multi-Factor Approach?
Any single metric index works, but has a structural bias: – Sales—Overexposed to large companies with thin margins – Cash flow—Overexposed to cyclical stocks at cyclical peaks – Dividends—Overexposed to mature, high-yield companies, and exclusion of
growth companies – Book Value—Overexposed to companies with aggressive accounting
Composite approach seeks to improve methodology – Seeks to diversify exposure to data source, sectors, and other risks – Seeks to improve robustness of methodology – Potential for positive risk-return performance
Please see important definitions, standardized performance, risk disclosures, etc. beginning at slide 40. Source: Research Affiliates, LLC
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Expanding the Investor Toolbox The Fundamental Index Approach
The Collapse and Rebound of Financial Stocks
RAFI Strategies provided an anchor from which to contra-trade1 in the last credit crisis
– Contra-trading also prevented “abandoning the losers2” during the credit crisis
1 The annual reconstitution back to a company’s fundamental scale as defined by a composite of sales, cash flow, book value, and dividends. This reconstitution forces the portfolio to trim stocks whose prices have recently outperformed their fundamentals and add to those stocks that have recently under performed their business’ economic footprint. 2 Securities that experienced a substantial loss in value. Source: Research Affiliates, LLC. Data 09/30/2008 through 09/30/2009.
Expanding the Investor Toolbox Accessing Low-Volatility Strategies
Important Information PRF has a gross expense ratio of 0.41%. However, the Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which resulted in the total net operating expense of 0.39%. These waivers and reimbursement contracts extend through at least Aug. 31, 2015.
©2014 Morningstar, Inc. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers. It may not be copied or distributed and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Morningstar ratings are based on a risk-adjusted return measure that accounts for variation in a fund’s monthly performance, placing more emphasis on the downward variations and rewarding consistent performance. The overall rating is derived from a weighted average of three-, five and 10-year rating metrics, as applicable. The overall rating is derived from a weighted average of three-, five- and 10-year rating metrics, as applicable. Ratings are as of the most recent quarter end and are subject to change every month. A fund is eligible for a Morningstar rating three years after inception. The top 10% of funds in a category receive five stars, the next 22.5% four stars, the next 35% three stars, the next 22.5% two stars and the bottom 10% one star. PowerShares FTSE RAFI US 1000 Portfolio was rated against the following numbers of US-domiciled US ETF Large Value funds over the following time periods: 34 funds in the last three years and 28 funds in the last five years. With respect to these US ETF Large Value funds, PowerShares FTSE RAFI US 1000 Portfolio received a Morningstar Rating of four stars for both the three- and five-year periods, respectively as of September 30, 2014.
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Seeking a Better Core: Expect More from Your Beta
Expanding the Investor Toolbox The Fundamental Index Approach
Past performance does not guarantee future results. Morningstar rankings are based on total return, excluding sales charges and including fees and expenses, versus all funds in the category tracked by Morningstar. Since Inception Lipper Rank begins the month-end date of the ETF’s inception month. Lipper fund percentile rankings are based on total returns, excluding sales charges and including fees and expenses, and are versus mutual funds, ETFs and funds of funds in the category tracked by Lipper. *Lipper Multi-Cap Value Classification Median expense ratio and Capital Gains are based on open-end, no- load mutual funds and ETFs; excludes funds of funds. While it is not Invesco PowerShares intention, there is no guarantee that the Funds will not distribute capital gains to its shareholders. Please see important definitions, standardized performance and risk disclosures beginning at slide 40.
PowerShares FTSE RAFI US 1000 Portfolio
Key features:
Mitigates potential shortcomings with traditional indexes
Rapid adoption by institutional investors
Potential Excess Returns through a Disciplined Rebalancing Process
Lower Expenses & No Cap Gains Since Inception Dec. 19, 2005
13th Percentile (20 of 165) Lipper Peer Group Ranking Since Inception Multi-Cap Value as of Sept. 30, 2014. The Lipper one-year rank is 15% (40 of 273) and the five-year rank is 30% (66 of 220).
Overall Morningstar Rating ETF Large Value (34 Funds) as of Sept. 30, 2014
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0.39%
1.04%
0%
1.95%
0.00%
0.50%
1.00%
1.50%
2.00%
2.50%
Net ExpenseRatio
CategoryAverage*
Capital GainsDistribution
CategoryAverage*
Expanding the Investor Toolbox Seek a High-Conviction Management Firm
Expanding the Investor Toolbox Seek a High-Conviction Management Firm
FOR US INVESTOR USE ONLY 38
“PowerShares’ brand is really about … providing investors more intelligent exposure to the markets, rather than just strictly cap-weighted beta.”
--Interview with IndexUniverse.com, “Straight From the Source: Bruce Bond”, Dec. 14, 2007
H. Bruce Bond, Founder & Former President and CEO, PowerShares Capital Management
Invesco PowerShares introduced many of the first non-cap-weighted
exchange-traded funds available today, calling them “Intelligent ETFs+”.
+ When we say that our ETFs are intelligent, we mean that in several different ways. Please see “Important Information” on slide 40for a more detailed explanation.
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Expanding the Investor Toolbox Seek a High-Conviction Management Firm
FOR US INVESTOR USE ONLY 39
Source: Invesco PowerShares as of Sept. 30, 2014. The smart beta category includes ETFs that have an alternative and selection index based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. Industry remainder represents all ETF products that meet this criteria, excluding PowerShares smart beta products. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. Beta is a measure of risk representing how a security is expected to respond to general market movements.
High-Conviction Smart Beta Management Firm with a Track Record of Meeting Client Needs
Invesco PowerShares has the largest and broadest set of Smart Beta ETFs with the longest track record.
# > 5 Years
PowerShares: 61
Provider with 2nd Largest Offerings: 32
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FOR US INVESTOR USE ONLY 40
Expanding the Investor Toolbox Seek a High-Conviction Management Firm
Smart Beta Key Takeaways
Represents alternative weighting or selection index-based
methodology that may outperform a benchmark and/or mitigate portfolio risk
Research shows that explosive growth will likely continue to accelerate1
Access to investment factors often relied on active managers for excess return and/or risk reduction
Adds value in the construction of strategic core allocations and tactical strategy implementation
Transcends active—passive paradigm, representing a significant expansion of the Advisor tool kit
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1 Based on data presented in slides 16, 17, 18. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. There is no assurance that an investment strategy will outperform or achieve its investment objectives.
FOR US INVESTOR USE ONLY 41
Expanding the Investor Toolbox Seek a High-Conviction Management Firm
For Additional Smart Beta Resources
Visit: pwr.sh/smart-beta
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Q & A/Discussion
Glossary & Terms
FOR US INVESTOR USE ONLY 43
Alternatively Weighted Fixed Income: Assigns issuer weights based upon alternative weighting methodologies including equal, fundamental or other non-market capitalization weighting approaches.
Alpha: a measure of performance relative to the market. An alpha of 1.0% means the fund outperformed the market 1.0%. A positive alpha is the extra return awarded to the investor for taking additional risk rather than by accepting the market return.
Basis Point: A basis point is the movement of interest rates or yields expressed in hundredths of a point.
Beta/Traditional: is a measure of risk representing how a security is expected to respond to general market movements.
High Beta: Utilizes a beta-weighted methodology to increase exposure to market movements of a benchmark without incorporating leverage.
Book Value: represents a company’s total assets minus intangibles and liabilities.
Buyback: Tracks US companies that consistently repurchase their own outstanding shares used by institutions and active managers for decades.
Cash Flow(s): is/are a revenue or expense stream that changes a cash account over a given period.
Correlation: indicates the degree to which two investments have historically moved in the same direction and magnitude.
Dividends/High Dividend: shows how much a company pays out each year to shareholders relative to its share price. Companies characterized as high dividend tend to issue higher annual payouts.
Dividend Growers: Ranks securities by their dividend yield while seeking to increase overall portfolio yield and potential for improved price performance.
Dividend Yield: the yearly dividend per share divided by the market price at the time of purchase. It is the ratio that shows how much a company pays out in dividends each year relative to its share price.
Down/Up Capture: Down capture measures how severely periods of negative benchmark returns affect a manager. Up capture measures how greatly periods of positive benchmark returns affect a manager.
Drawdowns: refers to the period of decline for an investment and usually quoted as a percentage between the highest net asset value to the lowest.
Earnings Momentum: is a measure of the acceleration of the amount of earnings that a company produces during a specific period, which is usually defined as a quarter or a year.
Excess Return: the rate of return that an investor can expect to receive on a security in excess of the risk-free rate for taking on additional risk compared to
a benchmark.
Expense Ratio: the total annual fees and expenses charged by a fund divided by average daily net assets. ETFs and index mutual funds tend to have lower expense ratios than most actively managed mutual funds because they do not have active management.
Equity Hedge/Tail Risk: A form of portfolio risk that arises when the possibility that an investment will move greater than what is shown by a normal distribution.
Equal Weighted: Assigns issuers in equivalent amounts.
Factor Driven: A method of using objective style determinates, such as
book value, cash flow, sales and dividends, within an index in attempt to achieve mutually exclusive security selection.
Fundamentals Weighted: Ranks all publicly listed US companies according to four fundamental measures of company size: sales, cash flow, book value and dividends.
Futures Market: an exchange where futures contracts and options on futures contracts are traded. This may include commodities, financial derivatives or a combination of these, as well as futures and options on indexes and equity products.
Liquidity: is characterized by a high level of trading activity and is a measure of the degree to which an asset or stock can be bought or sold in the market without affecting it’s asset price. Assets or stocks that can be easily bought or sold are known as liquid assets.
Low Cost: since ordinary brokerage commissions apply for each buy and sell transaction, frequent activity may increase the cost of ETFs.
Low Volatility: Utilize volatility rankings while seeking to minimize the effects of market fluctuations.
Market-Cap-Weighted: a type of index in which individual components are weighted according to market capitalization. Index value can be calculated by adding the market capitalizations of each index component and dividing that sum by the number of securities in the index.
Median: The middle number in a sorted list of numbers.
Momentum: Ranks securities relative to peers, utilizing relative strength methodology to identify the strongest and weakest investment trends.
Multi Strategy Alternatives: Seek positive lo correlations returns compared to the broader market through investments in a combination of strategies, that could include a combination of securities.
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Glossary & Terms
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Net Asset Value (NAV): the total value of a fund’s portfolio holdings per share or unit. Most mutual funds calculate their NAVs once per day, after the market close. Many ETFs calculate an indication of their NAVs throughout the trading day, in addition to calculating their NAVs once per day, after the market close.
Non-Cap Weighted: assign weights to stocks based on factors other than market capitalization in an attempt to reduce the risk of overexposure to a certain sector or group of stocks.
Non-Price Weighted: assign weights to stocks based on factors other than price in an attempt to identify fair value of each company and avoid overweighting overvalued stocks.
Price Momentum/Momentum: is a measure of the acceleration of a stock’s price during a specific period, which is usually defined as a quarter or a year.
Market-Cap-Weighted: A type of index in which individual components are weighted according to market capitalization. Index value can be calculated by adding the market capitalizations of each index component and dividing that sum by the number of securities in the index.
Quality/High Quality: a ranking that reflects the long-term growth and stability of a company’s earnings and dividends. Focuses on companies that have a Standard and Poor’s quality ranking of A-* or above which
have historically exhibited higher sharpe ratios and lower volatility.
Quantitative Weighted: a type of rules-based index in which individual components are weighted according to a variety of factors, such as volatility and momentum, in an attempt to generate excess return.
Risk Premiums/Premias: the rate of return that an investor can expect to receive on a security in excess of the risk-free rate for taking on additional risk.
Roll Return: roll return is the return, positive or negative, generated by rolling from a short-term futures contract to a longer term futures contract.
Sales: is a measure of revenue that a company produces during a specific period of time, which is usually defined as a quarter or a year.
Size: refers to a factor to used to determine the value of a stock.
Small Cap: refers to stocks with relatively small market capitalization.
Smart Beta: an alternative and selection index based methodology that may outperform a benchmark or reduce portfolio risk, or both. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk.
Sharpe Ratio: is a risk-adjusted measure calculated using standard deviation and excess return to determine reward per unit of risk. A higher Sharpe ratio indicates better risk adjusted performance.
Standard Deviation: Standard deviation measures a fund’s range of total returns and identifies the spread of a fund’s short-term fluctuations.
Tactical Asset Allocation: Process of dynamically adjusting market exposure based on market outlook with the objective of achieving portfolio out-performance.
Tax Efficiency: a measure of performance for an investment or a fund that is calculated by dividing the after-tax return (for a high-tax bracket investor) by the pre-tax return.
Invesco PowerShares does not offer tax advice. Please consult your own tax advisor for information regarding your own tax situation.
Transparency: ETFs disclose their holdings daily.
Value: is a measure of a stock that trades for less than its net asset value (NAV) and is usually identified by lower-than-average price-to-book or price-to-earnings ratios and/or high dividend yields.
Volatility: the annualized standard deviation of monthly index returns.
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Important Information
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Factor Methodology Index Live Date Since Index Inception
Factor
Buyback 11/9/2006 10.0% Buyback
Dividend Growers 12/9/2003 5.8%
Dividend Growers
Fundamental 11/28/2005 8.2% Fundamental High Beta 4/4/2011 2.4% High Beta High Dividend 11/23/2004 6.5% High Dividend High Quality 6/20/2010 7.2% High Quality Low Volatility 4/4/2011 8.2% Low Volatility Momentum 1/9/2007 7.6% Momentum
Source: Bloomberg L.P., as of September 30, 2014 the most recent data available. An investment cannot be made directly into an index. Index returns do not reflect any fees, expenses or sales charges. Nor do they represent fund performance.
Important Information
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PowerShares FTSE RAFI US 100 Portfolio (PRF)
PowerShares S&P 500 ® Low Volatility Portfolio (SPLV)
Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns an investor would receive if shares were traded at other times. Performance data quoted represents past performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate, and shares, when redeemed, may be worth more or less than their original cost. Current performance may be higher or lower than performance data quoted. After-tax returns reflect the highest federal income tax rate but exclude state and local taxes. Fund performance reflects fee waivers, absent which, performance data quoted would have been lower. After Tax Held and After Tax Sold are based on NAV.
See invecopowershares.com to find the most recent month-end performance numbers.
as of 09/30/2014 YTD 1 Year 3 Year 5 Year 10 Year Fund Inception Dec. 19, 2005
Index History (%)
FTSE RAFI US 1000 Index 7.51 18.83 24.32 15.75 N/A 9.06
Russell 1000 Index 7.97 19.01 23.23 15.90 8.46 7.69
Fund History (%)
Fund NAV 7.21 18.37 23.84 15.30 N/A 8.58
After Tax Held 6.67 17.64 23.30 14.88 N/A 8.24
After Tax Sold 4.08 10.50 18.90 12.30 N/A 6.93
Fund Market Price 7.37 18.50 23.83 15.38 N/A 8.63
as of 09/30/2014 YTD 1 Year 3 Year 5 Year 10 Year Fund Inception
May 5, 2011
Index History (%)
S&P 500 Low Volatility Index 7.54 15.09 17.45 N/A N/A 14.18
S&P 500 Index 8.34 19.73 22.99 15.70 8.11 14.62
Fund History (%)
Fund NAV 7.33 14.78 17.15 N/A N/A 13.87
After Tax Held 6.49 13.69 16.36 N/A N/A 13.14
After Tax Sold 4.14 8.47 13.39 N/A N/A 10.83
Fund Market Price 7.56 15.05 17.14 N/A N/A 13.92
Important Information
Opinions expressed are of the speaker, and are not necessarily that of Invesco PowerShares, Invesco Distributors, Inc. or Invesco Ltd. Invesco Ltd. and its subsidiaries offer no guarantees or warranties as to the accuracy and reliability of opinions expressed, and cannot guarantee similar experiences. Important Information There is no assurance that the products listed in this material will achieve their investment objectives. Please be aware that the products listed are subject to various risks which depending upon the product may include risks such as value investing, sector, interest rate, fixed-income investing, commodities and futures, and foreign and emerging markets. For further description on the relative risks for each product please obtain the appropriate prospectus by visiting invescopowershares.com/prospectus. +When we say that our ETFs are intelligent, we mean that in several different ways: One of our largest family of ETFs is based on Intellidexes™ — dynamic indexes that use rules-based quantitative analysis to choose stocks for their capital appreciation potential. We believe this is an intelligent way for an index to select stocks. Our ETFs based on FTSE RAFI® indexes weight stocks according to fundamental economic factors. We believe this is a more intelligent weighting method than market-cap weighting. Furthermore, our Fundamental Index ETFs are based on four factors — sales, cash flow, book value and dividends — which we believe is a more balanced, intelligent approach than weighting stocks according to just one fundamental measure. We also have a wide range of ETFs that target narrow slices of the market (Intelligent Access) — from niche industries to specific world regions. For investors who are interested in these niches, we believe ETFs — which invest in multiple companies within a market sector — may offer a more intelligent investment approach than stock picking.
General Risk Information
There are risks involved with investing in ETFs, including possible loss of money. Index-based ETFs are not actively managed and are subject to risks similar to those of stocks, including those regarding short selling and margin maintenance
requirements. Ordinary brokerage commissions apply. The Fund's return may not match the return of the Underlying Index. There is no assurance that the strategies or funds listed in this material will achieve their investment objectives. Investments focused in a particular industry are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments. The information in this presentation is provided for informational purposes only and is not to be construed as investment advice or a recommendation of a particular strategy or product. All strategies discussed must be implemented by a financial advisor. Asset allocation/diversification do not eliminate the risk of loss. Important Risk Information Low Volatility: Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations over time. There can be no guarantee the Fund will provide low volatility. High Dividend Risk Information: Securities that pay high dividends as a group can fall out of favor with the market, causing such companies to underperform companies that do not pay high dividends. High Yield/Quality Risk Information: High-yield securities have additional risks, including interest-rate changes, decreased market liquidity and a larger amount of outstanding debt than investment-grade securities.
BuyBack Risk Information: BuyBack strategies are characterized by companies that consistently repurchase their own outstanding shares of common stock. Common stock risk is the financial risk that the value of an individual company's stock may fall as a result of factors directly relating to that company, such as decisions made by its management or lower demand for the company's products or services. Common stocks may decline significantly in price over short or extended periods of time.
FOR US INVESTOR USE ONLY 47 P-SBTD-PPT-1P 10.14 x01.15
Important Information
Important Risk Information Momentum Risk Information: The momentum style of investing is subject to the risk that the securities may be more volatile than the market as a whole, or that the returns on securities that have previously exhibited price momentum are less than returns on other styles of investing. High Beta Risk Information: Beta investing entails investing in securities that are more volatile based on historical market index data. Sector & Industry Risk Information: Investments focused in a particular industry are subject to greater risk, and are more greatly impacted by market volatility than more diversified investments. International Risk Information: The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues. Fundamentals Weighted Fixed Income Risk: 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.
PowerShares FTSE RAFI US 100 Portfolio (PRF) Investments focused in a particular industry are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.
Equity risk is the risk that the value of equity securities, including common stocks, may fall due to both changes in general economic and political conditions that impact the market as a whole, as well as factors that directly relate to a specific company or its industry.
PowerShares S&P 500® Low Volatility Portfolio (SPLV) The Fund is considered non-diversified and may be subject to greater risks than a diversified fund.
Investments focused in a particular industry are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.
Equity risk is the risk that the value of equity securities, including common stocks, may fall due to both changes in general economic and political conditions that impact the market as a whole, as well as factors that directly
relate to a specific company or its industry.
Index Information Dow Jones Industrial Average Index is a price-weighted measure of 30 U.S. blue-chip companies. The Russell 2000® Value Index is an unmanaged index considered representative of small-cap value stocks. The Russell 2000 ® Value Index is a trademark/service mark of the Frank Russell Co. Russell® is a trademark of the Frank Russell Co. The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. The S&P 500® Financials Index is an unmanaged index considered representative of the financial market. RAFI 1000 Index is designed to track the performance of the largest US equities, selected based on the following four fundamental measures of firm size: book value, cash flow, sales and dividends. The 1,000 equities with the highest fundamental strength are weighted by their fundamental scores. Trademarks & Other Information PowerShares® is a registered trademark of Invesco PowerShares Capital Management LLC (Invesco PowerShares). Invesco PowerShares Capital Management LLC and Invesco Distributors, Inc. are indirect, wholly owned subsidiaries of Invesco Ltd.
Investors should be aware of the risks associated with data sources and quantitative processes used in our investment management process. Errors may exist in data acquired from third party vendors, the construction of model portfolios, and in coding related to the index and portfolio construction process. While Research Affiliates takes steps to identify data and process errors so as to minimize the potential impact of such errors on index and portfolio performance, we cannot guarantee that such errors will not occur.
“Fundamental Index®” and/or “Research Affiliates Fundamental Index®” and/or “RAFI” and/or all other RA trademarks, trade names, patented and patent-pending concepts are the exclusive property of Research Affiliates, LLC.
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Important Information
S&P,® S&P 500®, S&P 500 Low Volatility Index®, S&P 500 High Quality®, S&P 500 High Beta Aristocrat® and S&P 500 High Beta® are registered trademarks of Standard & Poor’s Financial Services LLC and have been licensed for use by S&P Dow Jones Indices and sublicensed for certain purposes by Invesco PowerShares. The Fund is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, S&P or their respective affiliates and neither S&P Dow Jones Indices LLC, S&P or their respective affiliates make any representation regarding the advisability of investing in such product(s).
The NASDAQ US Broad Dividend Achievers Index is a trademark of NASDAQ OMX Group, Inc. and is licensed for use by Invesco PowerShares Capital Management LLC in connection with the PowerShares Dividend Achievers Portfolio. The Fund is not sponsored or endorsed by NASDAQ OMX Group, Inc., and NASDAQ OMX Group, Inc. makes no warranty or representation as to the accuracy and/or completeness of the Index or results to be obtained by any person from use of the Index or the trading of the Product.
The Technical Leaders™ Ranking System is a trademark of Dorsey, Wright & Associates, LLC that is licensed to Invesco PowerShares Capital Management LLC. This product is not sponsored, recommended, sold or promoted by Dorsey, Wright & Associates, LLC or any of its affiliates.
The NASDAQ Buyback Achievers™ Index is a trademark of NASDAQ OMX Group, Inc. and is licensed for use by Invesco PowerShares Capital Management LLC in connection with the PowerShares Buyback Achievers Portfolio. The Fund is not sponsored or endorsed by NASDAQ OMX Group, Inc. and NASDAQ OMX Group, Inc. makes no warranty or representation as to the accuracy and/or completeness of the Index or results to be obtained by any person from use of the Index or the trading of the ETF.
The Intellidex™ Indexes are trademarks of NYSE Euronext or its affiliates and are licensed for use by Invesco PowerShares Capital Management LLC in connection with the PowerShares Intellidex investment products. The products are not sponsored or endorsed by NYSE Arca, and NYSE Arca makes no warranty or representation as to the accuracy and/or completeness of the Indexes or results to be obtained by any person from use of the Indexes or the trading of the products.
"Keefe, Bruyette & Woods, Inc.", "KBW Premium Yield Equity REIT Index" and "KBW" are trademarks of KBW and have been licensed for use by Invesco
PowerShares Capital Management LLC.
About The Cogent Study
The data contained within this analysis was collected from 193 participants between September 5 and October 2, 2013. A 15-minute online survey was administered by Cogent Research, a division of Market Strategies International, to institutional decision makers, including pensions, endowments/foundations, non-profit institutions, mutual funds, as well RIAs who manage institutional assets. All institutions had at least $20 million in assets and allocated at least 1% of their assets to ETFs. Institutional RIAs had at least $25 million in assets under management – a portion of which was managed on behalf of institutional investors.
Invesco PowerShares is not affiliated with Cogent Research, a division of Market Strategies International. Cogent Research is an independent full-service market research and consulting firm, specializing in wealth management. Cogent Research was hired by Invesco PowerShares to conduct the research used in the creation of this study. Respondents were not made aware of Invesco PowerShares’ involvement in this research initiative.
Before investing, investors should carefully read the prospectus/summary prospectus and carefully consider the investment objectives, risks, charges and expenses. For this and more complete information about the Fund call 800 983 0903 or visit invescopoershares.com for the prospectus/ summary prospectus.
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NOVEMBER 12, 2014
Smart Beta Investing: How to Build a Portfolio
the "Smart" Beta Way
Up next:
What You Need to Know about The
Bond Market
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TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.
© 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission
NOVEMBER 12, 2014
Important Disclosures
Carefully consider the investment objectives, risks, charges and expenses before investing in an ETF (Exchange Traded Fund). A
prospectus, obtained by calling 800-669-3900, contains this and other important information about an investment company. Read carefully
before investing.
ETFs can entail risks similar to direct stock ownership, including market, sector, or industry risks. Some ETFs may involve international risk, currency risk, commodity risk, and interest rate risk. Trading prices may not reflect the net asset value of the underlying securities. Commission fees typically apply. Stock investments are subject certain risks such as market risk, price volatility and liquidity risk. Past performance of a security, strategy or index is no guarantee of future results or success.
The material, views and opinions expressed in this presentation are solely those of the presenter and may not be reflective of those held
by TD Ameritrade, Inc.
The webcast is provided for general information purposes only and should not be considered an individualized recommendation or advice.
TD Ameritrade makes no representations or warranties with respect to the accuracy or completeness of the information provided.
Examples and recommendations presented by Invesco PowerShares Capital Management LLC should not be considered a
recommendation or solicitation by TD Ameritrade to purchase or sell any specific security.
TD Ameritrade and Invesco PowerShares Capital Management LLC are separate, unaffiliated companies and not responsible for one
another’s products, services or policies. This presentation includes a feature that allows recording of electronic (including audio) participant-shared content. By continued participation in this session you automatically consent to such recording, and the subsequent rebroadcast of any recording.