The PowerShares S&P 500 QVM UCITS ETF aims to replicate the S&P 500 Quality, Value & Momentum Multi-factor Index.
“And seeks to provide a solution to the twin challenges of getting value out of the US stock market and timing investment in single factors,” according to Invesco.
Nicolas Samaran, head of Product Development at PowerShares (EMEA), said: “As the largest single economy in the world, the US may represent a significant portion of investors’ portfolios. However, in the last few years, research shows that it has been challenging to find sustainable outperformance.
“This is why a number of investors have been looking at finding a more refined range of solutions. In particular, they have started looking at factor strategies where academia shows that individual factors have delivered performance over the long-term.
“But navigating between factors successfully can be difficult as single factors are cyclical in nature. Therefore, we have identified a market need for a strategy that combines factors and seeks to remove the risk associated with timing,” he said.
Under the QVM system, Quality identifies companies with strong balance sheets and strong historical operating performance; Value identifies those stocks that are priced attractively based on their intrinsic value; and Momentum identifies those stocks that have had historical positive price movements.
To determine the components of the QVM Index, all companies included in the S&P 500 Index are assigned scores based on their performance against the three factors. These scores are then combined on an equal-weighted basis into a final factor composite. All companies are then ranked by their final factor composite with the top 100 companies being selected for inclusion in the Index.
Invesco said its Ucits ETF was the first of its kind combining QVM factors in this way and targeting potential superior risk-adjusted returns than single factor strategies combined.
The PowerShares S&P 500 QVM UCITS ETF is scheduled to be listed on stock exchanges in Ireland, the UK, France, Italy, Germany and Switzerland.
