PowerShares ETFs

PHDG - PowerShares S&P 500 Downside Hedged Portfolio

Alternative - Hedged Equity
Actively managed

Product Details

The PowerShares S&P 500® Downside Hedged Portfolio (the Fund) is an actively managed exchange-traded fund (ETF) that seeks to achieve positive total returns in rising or falling markets that are not directly correlated to broad equity or fixed-income market returns. The Fund seeks to achieve its investment objective by using a quantitative, rules-based strategy that seeks to obtain returns that exceed the S&P 500 Dynamic VEQTOR Index (the Index). The Index provides investors with broad equity market exposure with an implied volatility hedge by dynamically allocating between equity, volatility and cash. The index allows investors to receive exposure to the equity and volatility of the S&P 500 Index in a dynamic framework.

Investors can now help manage portfolio risk and return with the PowerShares S&P 500 Downside Hedged Portfolio – an actively managed exchange-traded fund that features dynamic allocation and an implied volatility hedge. The portfolio seeks to have the ability to buffer against volatility in falling markets, while allowing investors to participate in rising markets.

Downside protection potential in volatile markets

The PowerShares S&P 500 Downside Hedged Portfolio makes use of volatility futures as an implied hedge against market turbulence. Allocations are reviewed daily, and in the event of sustained volatility, the fund can assume a 100% cash position. Volatility futures have demonstrated a strong negative correlation to the broader markets over the past 10 years. As a result, volatility futures have provided some of the strongest, most competitive positive returns in the worst-performing market environments during this time.

By rotating into volatility futures, the underlying S&P 500 Dynamic VEQTOR Index can provide a market hedge in sustained down markets.

Source: Bloomberg L.P. average rolling 30-day returns from Jan. 22, 2009 to Dec. 31, 2015.

Volatility measures the amount of fluctuation in the price of a security or portfolio over time.

Correlation is the degree to which two investments have historically moved in relation to each other.

 

Upside participation potential in rising markets

The PowerShares S&P 500 Downside Hedged Portfolio is analyzed daily using a disciplined, rules-based methodology. As market volatility decreases, the portfolio dynamically reduces its exposure to volatility futures and increases its allocation in US equities – allowing investors to potentially benefit from sustained, rising markets.

By rotating into equities, the underlying S&P 500 Dynamic VEQTOR Index allows investors to potentially benefit from sustained, rising markets.

Source: Bloomberg L.P. from Nov. 18, 2009 through Dec. 31, 2014. Past performance does not guarantee future results. An investment cannot be made directly in an index.

Volatility measures the amount of fluctuation in the price of a security or portfolio over time.

Dynamic allocation between three asset classes

The PowerShares S&P 500 Downside Hedged Portfolio tracks the S&P 500 Dynamic VEQTOR Index, and dynamically allocates between the S&P 500 Index, volatility futures, and cash – depending on market conditions. This dynamic allocation offers investors broad-based equity exposure during rising markets, with an implied hedge during periods of increased market volatility.

The PowerShares S&P 500 Downside Hedged Portfolio dynamically rotates between different asset classes, depending on market volatility.

Target Equity/Volatility Allocations (% S&P 500/% VIX Futures)
Realized Volatility Implied Volatility Downtrend Implied Volatility No Trend Implied Volatility Uptrend
Less than 10% 97.5/2.5 97.5/2.5 90/10
10% ≤ RV < 20% 97.5/2.5 90/10 85/15
20% ≤ RV < 35% 90/10 85/15 75/25
35% ≤ RV < 45% 85/15 75/25 60/40
More than 45% 75/25 60/40 60/40

Source: Standard & Poor's

Volatility measures the amount of fluctuation in the price of a security or portfolio over time.

as of 04/30/2016 03/31/2016

Performance

  YTD 1Yr 3Yr 5Yr 10Yr Since Inception
Index History (%)
S&P 500 Dynamic VEQTOR Index 1.82 -4.79 2.15 5.45 N/A 3.58
S&P 500 Index 1.35 1.78 11.82 11.58 7.01 14.39
HFRX Global Hedge Fund Index -1.87 -7.36 -0.92 -1.18 -0.51 0.31
U.S. Treasury Bills Index 0.07 0.11 0.06 0.06 0.99 0.06
S&P 500 Dynamic VEQTOR Index 1.16 -4.91 1.53 4.90 N/A 3.29
S&P 500 Index 1.74 1.21 11.26 11.02 6.91 14.15
HFRX Global Hedge Fund Index -1.47 -7.18 -0.99 -1.19 -0.58 0.42
U.S. Treasury Bills Index 0.09 0.13 0.07 0.07 0.95 0.07
Fund History (%)
Fund NAV 1.56 -5.30 1.36 N/A N/A 2.66
After Tax Held 1.44 -5.96 0.12 N/A N/A 1.48
After Tax Sold 0.88 -3.01 0.51 N/A N/A 1.54
Fund Market Price 1.60 -5.47 1.34 N/A N/A 2.65
Fund NAV 0.78 -5.49 0.78 N/A N/A 2.36
After Tax Held 0.67 -6.15 -0.45 N/A N/A 1.22
After Tax Sold 0.44 -3.11 0.08 N/A N/A 1.33
Fund Market Price 0.70 -5.53 0.74 N/A N/A 2.32

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. Returns less than one year are cumulative.


as of 03/31/2016

Growth of $10,000

Data beginning Fund inception and ending 03/31/2016. Fund performance shown at NAV.

An investor cannot invest directly in an index. The results assume that no cash was added to or assets withdrawn from the Index. Index returns do not represent Fund returns. The Index does not charge management fees or brokerage expenses, nor does the Index lend securities, and no revenues from securities lending were added to the performance shown.

as of 05/23/2016

Fund Allocation

as of 05/23/2016 Top Holdings | View All

Fund Holdings subject to change

Ticker Company % of Fund
ESM6 CME E-Mini Standard & Poor's 500 Index Future 6.62
UXM6 CBOE Volatility Index Future 6.34
AAPL Apple Inc 2.50
MSFT Microsoft Corp 1.85
XOM Exxon Mobil Corp 1.74
JNJ Johnson & Johnson 1.45
UXN6 CBOE Volatility Index Future 1.29
GE General Electric Co 1.29
AMZN Amazon.com Inc 1.26
FB Facebook Inc 1.24

Distributions | View All | Distribution Information

Ex-Date Record Date Pay Date $/
Share
Ordinary Income Short Term Gains Long Term Gains Return of Capital
03/18/2016 03/22/2016 03/31/2016 0.06398 0.06398 - - -
12/24/2015 12/29/2015 12/31/2015 0.04366 0.04366 - - -
12/18/2015 12/22/2015 12/31/2015 0.14654 0.14654 - - -
09/18/2015 09/22/2015 09/30/2015 0.07053 0.07053 - - -
06/19/2015 06/23/2015 06/30/2015 0.07770 0.07770 - - -
03/20/2015 03/24/2015 03/31/2015 0.06713 0.06713 - - -
12/24/2014 12/29/2014 12/31/2014 1.23409 - 1.12623 0.10786 -
12/19/2014 12/23/2014 12/31/2014 0.10420 - - - -
09/19/2014 09/23/2014 09/30/2014 0.05248 - - - -
06/20/2014 06/24/2014 06/30/2014 0.06288 - - - -
03/21/2014 03/25/2014 03/31/2014 0.06531 - - - -
12/20/2013 12/24/2013 12/31/2013 0.29210 - - - -
09/20/2013 09/24/2013 09/30/2013 0.04546 - - - -
06/21/2013 06/25/2013 06/28/2013 0.08291 - - - -
03/15/2013 03/19/2013 03/28/2013 0.07096 - - - -
12/21/2012 12/26/2012 12/31/2012 0.02307 - - - -

Frequency Distribution of Discounts & Premiums

    Bid/Ask MidPoint Above NAV
Quarter
Ending
Days 0.00-
0.25%
0.26-
0.50%
0.51-
0.99%
1.00-
1.49%
1.50-
1.99%
≥2.00%
03/31/2016 61 20 1 0 0 0 0
12/31/2015 64 23 1 0 0 0 0
09/30/2015 64 22 2 0 0 0 0
06/30/2015 63 24 0 0 0 0 0
Year Ended 2015 252 111 6 1 0 0 0
    Bid/Ask Midpoint Below NAV
Quarter
Ending
Days 0.00-
0.25%
0.26-
0.50%
0.51-
0.99%
1.00-
1.49%
1.50-
1.99%
≥2.00%
03/31/2016 61 38 2 0 0 0 0
12/31/2015 64 38 2 0 0 0 0
09/30/2015 64 36 3 1 0 0 0
06/30/2015 63 39 0 0 0 0 0
Year Ended 2015 252 128 5 1 0 0 0

Fund Inception: 12/06/2012

Shareholders may pay more than net asset value when they buy Fund shares and receive less than net asset value when they sell those shares, because shares are bought and sold at current market prices. Performance data quoted represents past performance, which is not a guarantee of future results.


Hedging Against Market Uncertainty When You Need It Most

In today's market environment, downside protection continues to be a primary focus for investors. The challenge, however, is to both generate positive returns and reduce downside risk. The PowerShares S&P 500 Downside Hedged Portfolio® (PHDG) seeks to be a solution to this challenge.

PHDG provides investors with broad equity market exposure with an implied volatility hedge by dynamically allocating between equity, volatility and cash.


Ongoing Market Uncertainty

Market volatility can strike quickly and unexpectedly. History tells us that increased market fear and uncertainty typically correspond with declines in the broader market.

How to Hedge Against Market Uncertainty?

Investors can gain exposure to the fluctuations in volatility through VIX futures. Historically the correlation of VIX futures to the S&P 500® Index has been no higher than -0.75. In other words, when the S&P 500 has performed poorly, VIX futures have generally performed well. The cost of holding a constant allocation of VIX futures, however, can be significant. Ongoing roll costs can drag portfolio returns.

Rules-Based Management of VIX Futures

Dynamically allocating to VIX futures through a rules-based strategy may help mitigate roll costs while still providing a hedge against downside losses. In addition, this strategy has the potential to generate a positive return in negative equity markets.

S&P 500 Dynamic VEQTOR Index vs S&P 500 Index

Sources: Standard & Poor's and Bloomberg L.P. from Nov. 18, 2009 through Dec. 31, 2015

The idea behind PowerShares S&P 500 Downside Hedged Portfolio is simple – dynamically allocate to VIX futures depending on historical and forward-looking market volatility trends.

According to the strategy allocation rules as defined by the underlying index, the S&P 500® Dynamic VEQTOR Index (the Index), when market uncertainty rises, the fund will add to its market hedge through VIX futures. In a falling equity market, increasing allocations to VIX futures may not only hedge downside losses, but may allow for positive strategy performance in down markets. As market uncertainty falls, the fund will decrease the amount of its market hedge. Given the uncertainty in the markets, the fund is designed to maintain a degree of downside hedging via VIX futures or cash regardless of the market environment.

Lastly, the index has a built-in stop loss mechanism which seeks to allow the Fund to move to 100% cash if losses over the preceding five-day period are greater than 2%. This stop loss feature can serve as a circuit breaker to help minimize significant losses due to a sudden spike in volatility and an abrupt drop in the equity market.

Under normal circumstances the Fund maintains a minimum 2.5% exposure to VIX futures. As market uncertainty rises, the Fund can allocate as much as 40% of the portfolio to VIX futures.

Increasing Your Hedge As Market Uncertainty Rises

FOR ILLUSTRATIVE PURPOSES ONLY; Market uncertainty is defined as a combination of both historical and implied volatility.

The PowerShares S&P 500 Downside Hedged Portfolio is an actively managed exchange-traded fund (ETF) that seeks to achieve positive total returns in rising or falling markets that are not directly correlated to broad equity or fixed income market returns.

About the Fund

  • Employs a quantitative, rules-based strategy that seeks to obtain returns that exceed the S&P 500 Dynamic VEQTOR Index
  • Seeks to provide low correlation to the broader equity and fixed-income markets
  • Will invest in a combination of equity securities in the S&P 500 Index, VIX futures contracts and cash
  • Through the rules-based strategy, Fund allocations are determined by analysis of historical and implied market volatility as well as Fund performance
  • Evaluated on a daily basis
  • No K-1, issues 1099
  • 0.39% total expense ratio

About the Index

The S&P 500 Dynamic VEQTOR Index provides investors with broad equity market exposure with an implied volatility hedge by dynamically allocating between equity, volatility and cash. The index allows investors to receive exposure to the equity and volatility of the S&P 500 Index in a dynamic framework.

The S&P 500 Dynamic VEQTOR Index provides investors with broad equity market exposure with an implied volatility hedge by dynamically allocating between equity, volatility and cash. The index allows investors to receive exposure to the equity and volatility of the S&P 500 Index in a dynamic framework.

 Risk & Other Information

There are risks involved with investing in ETFs, including possible loss of money. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance. Ordinary brokerage commissions apply. The Fund's return may not match the return of the Index. The Fund is subject to certain other risks. Please see the current prospectus for more information regarding the risk associated with an investment in the Fund.

The investment techniques and risk analysis used by the portfolio managers may not produce the desired results.

The Chicago Board Options Exchange (CBOE) can make methodological changes to the calculation of the VIX Index that could affect the value of the futures contracts, which could affect the value of your investment.

Future contracts project price levels in the future, market circumstances may cause a discrepancy between the price of the near and distant contract. In the event of adverse price movements, the Fund would be required to make daily cash payments to maintain its required margin and segregate liquid assets or enter into off-setting positions to "cover" open positions in futures contracts. By investing in future contracts, the Fund also is subject to counterparty and liquidity risks.

The Fund will gain most of its exposure by entering into VIX Index futures, and intends to restrict its income from VIX Index futures that do not generate qualifying income, to a maximum of 10% of its gross income. there is no guarantee the Fund will be successful, and failure to comply with this restriction would have significant negative consequences to shareholders. The contracts included in the VIX Index historically have traded in "contango" markets, which could adversely affect the value of Shares.

An investment in exchange-traded funds (ETFs) may trade at a discount to net asset value, fail to develop an active trading market, halt trading on the listing exchange, fail to track the referenced index, or hold troubled securities. ETFs may involve duplication of management fees and certain other expenses. Certain of the ETFs the fund invests in are leveraged, which can magnify any losses on those investments.

Exchange-traded notes (ETNs) are subject to credit risk of the issuer, and the value of the ETN may drop due to a downgrade in the issuer's credit rating, despite the underlying market benchmark or strategy remaining unchanged.

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 redeem in-kind.

The Fund is designed to achieve positive total returns in rising or falling markets. Significant short-term price movements could adversely affect the performance of the Fund and cause substantial losses.

The Fund may hold illiquid securities that it may be unable to sell at the preferred time or price and could lose its entire investment in such securities.

Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa.

The Fund is non-diversified and may experience greater volatility than a more diversified investment.

The Fund's investments in futures contracts will cause it to be deemed to be a commodity pool, subjecting it to regulation under the Commodity Exchange Act and Commodity Futures Trading Commission (CFTC) rules. The Adviser, a registered Commodity Pool Operator (CPO) and commodity trader advisor (CTA), and the Fund will be operated in accordance with CFTC rules. Registration as a CPO or CTA subjects the Adviser to additional laws, regulations and enforcement policies; all of which could increase compliance costs, affect the operations and financial performance. Registration as a commodity pool may have negative effects on the ability of the Fund to engage in its planned investment program.

The tax treatment of futures may be adversely affected by changes in legislation, regulations or other legally binding authority. If, as a result of any such adverse action, the income of the Fund from certain futures was treated as nonqualifying income, the Fund might fail to qualify as a regulated investment company and be subject to federal income tax at the Fund level.

The Fund may engage in frequent trading of its portfolio securities in connection with the rebalancing or adjustment of the Underlying Index.

The S&P 500® Index is an unmanaged index considered representative of the U.S. stock market. The T-Bill 3 Month Index (U.S. Treasury Bills Index) is tracked by Lipper to provide performance for the 3-month U.S. Treasury Bill. The HFRX Global Hedge Fund Index is an investable hedge fund index designed to provide returns that reflect the performance of the global hedge fund universe. The VIX Index is a theoretical calculation and cannot be traded. The VIX Index measures the 30-day forward volatility of the S&P 500 Index as calculated based on the prices of certain put and call options on the S&P 500 Index.

S&P® is a registered trademark of Standard & Poor's Financial Services LLC (S&P) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (Dow Jones). These trademarks have been licensed for use by S&P Dow Jones Indices LLC. S&P® and Standard & Poor's® are trademarks of S&P and Dow Jones® is a trademark of Dow Jones. These trademarks have been sublicensed for certain purposes by Invesco PowerShares Capital Management LLC (Invesco PowerShares). The Index is a product of S&P Dow Jones Indices LLC and/or its affiliates and has been licensed for use by Invesco PowerShares. The Fund is not sponsored, endorsed, sold or promoted by S&P Dow Jones Indices LLC, Dow Jones, S&P or their respective affiliates and neither S&P Dow Jones Indices LLC, Dow Jones, S&P or their respective affiliates make any representation regarding the advisability of investing in such product(s).

as of 05/24/2016
3:59 PM EST

PHDG
Intraday Stats

  • Last Trade $24.71
  • Current IIV $24.78
  • Change $0.10
  • % Change 0.43%
as of 05/23/2016
  • NAV at market close $24.57
as of 05/23/2016

Fund Yield

  • SEC 30 Day Yield 1.53%
  • Distribution Rate 1.04%
  • 12 Month Distribution Rate 1.63%
  • 30-Day SEC Unsubsidized Yield
    as of 05/23/2016
    1.51%
as of 05/23/2016

Prior Close

  • Closing Price $24.61
  • Bid/Ask Midpoint $24.55
  • Bid/Ask Prem/Disc -$0.02
  • Bid/Ask Prem/Disc -0.08%

Fund Details

  • Fund Ticker PHDG
  • CUSIP # 73935B805
  • ISIN US73935B8054
  • Intraday NAV PHDGIV
  • Index Ticker SPVQDTR
  • Management Fee 0.39%
  • Acquired Fund Fees & Expenses 0.04%
  • Total Expense Ratio 0.43%
  • Fee Waiver 0.04%
  • Net Expense Ratio 0.39%
  • Marginable Yes
  • Short Selling Yes
  • Options No
  • Exchange NYSE Arca
  • Inception Date 12/06/2012
  • # of Holdings 512
    as of 05/23/2016
as of 05/24/2016

Quick Facts

  • Previous Close $24.60
  • Open $24.63
  • Today's High $24.74
  • Today's Low $24.63
  • Today's Volume 196,398
  • 52 Week High $26.83
  • 52 Week Low $23.38
  • Shares Outstanding 7.05MM
  • Market Value $173.2MM