The actively managed LALT is a first-of-its-kind ETF designed to mute portfolio volatility while boosting risk-adjusted returns. LALT uses a long-short strategy.
“The PowerShares LALT strategy is designed to help investors reach their portfolio objectives by reducing the volatility of returns and mitigating the risk of drawdowns. To accomplish this, the Fund employs a long-short strategy that seeks to provide a positive total return with low correlation to the broader securities markets through a cost efficient vehicle,” said PowerShares in a statement.
LALT tracks a proprietary benchmark developed by Morgan Stanley (MS) that is comprised of quantitative, rules-based strategies.
The benchmark seeks to capture non-tradition risk premia across multiple asset classes, including equities, bonds, currencies and volatility instruments.
“Since the Benchmark’s underlying strategies draw returns from different risk sources, combining the strategies may result in further diversification and risk reduction,” said PowerShares in the statement.
LALT currently has 95 holdings, including a 44.6% allocation to U.S. equities. The fund, which charges 0.95% per year, also long and short positions in G-10 currency forwards as well VIX index futures and a short position in equity index futures, according to PowerShares data.
Other new ETFs introduced by PowerShares this year include the PowerShares NYSE Century Portfolio (NYCC) , PowerShares International BuyBack Achievers Portfolio (IPKW) and the most recent addition, the PowerShares Variable Rate Preferred Portfolio Fund (VRP) . [New Variable Rate ETF Debuts]
ETF Trends editorial team contributed to this post.
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