PowerShares Adds To Low-Cost Lineup With New Bond ETF

Invesco Ltd. IVZ's PowerShares unit, the fourth-largest U.S. exchange-traded funds issuer, recently ventured into the low-cost, plain vanilla ETF space in a big way, launching five inexpensive, pure beta ETFs in a single day last month.

PowerShares followed that up with the recent launch of the PowerShares PureBeta US Aggregate Bond Portfolio PBND. PBND follows the BofA Merrill Lynch US Broad Market Index.

That cap-weighted index “measures the performance of US dollar-denominated, investment grade debt securities, including US Treasury notes and bonds, quasi-government securities, corporate securities, residential and commercial mortgage-backed securities and asset-backed securities,” according to PowerShares. 

Related Link: International Bond ETFs

Plenty Of Competition

The aggregate bond space is teaming with competition in the ETF space. For example, the iShares Core U.S. Aggregate Bond ETF AGG is the largest bond ETF in the world with $50.3 billion in assets under management.

The Vanguard Total Bond Market ETF BND is the second-largest U.S. fixed income ETF with $35.6 billion in assets under management as of the end of August. AGG and BND both charge 0.05 percent per year, or $5 on a $10,000 investment.

PBND, the new PowerShares ETF, matches that expense ratio. However, PBND has some notable differences compared to its established rivals. The new PowerShares ETF holds 146 bonds compared to nearly 6,400 found in AGG and over 8,300 in BND.

More Important PBDN Details

Just over 56 percent of PBND holdings have maturities of one to five or five to 10 years. About 92 percent of the ETF's holdings are rated A- up to AAA.

PBND, which debuted with $25 million in assets under management, trades on the Bats ETF Marketplace, bringing the number of PowerShares ETFs listed on the Bats ETF Marketplace to 16.

Year to date, Bats has welcomed 102 ETFs to its U.S. market. In the second quarter of 2017, Bats welcomed a total of 26 ETFs to the Bats ETF Marketplace, and year to date has won 36 percent of all new U.S. ETF listings. There are now 234 ETFs listed on Bats ETF Marketplace, from 41 different issuers,” according to the exchange operator.

Related Link: PowerShares Launches Low-Cost ETFs