Invesco PowerShares Managing Director Dan Draper discussed exchange traded fund construction and the advantages of looking beyond cap-weighted indexes with ETF Trends Publisher Tom Lydon at the ETF.com Inside ETFs conference in Hollywood, Fla.
“Buying the largest, most liquid companies in an index is cost-effective,” said Draper. The rebalancing, tax-wise, there’s a lot benefits to doing that, but we’ve seen, very distinctively, that when you have big asset bubbles and bursts of those bubble, it can lead to problems.”
Draper highlighted the newly minted PowerShares Russell 1000 Equal Weight Portfolio (EQAL) , which not only equal weights nine sectors, but adds a second layer of equal weighting by assigning an equal weight to the ETFs nearly 1,040 holdings.
EQAL is not even two months old and already has nearly $47 million in assets under management and charges just 0.2% per year.
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