Getting to Know the KBW Nasdaq Index Family: 2nd Ed.

Index Research | Index Research
North America Equity Research
August 2, 2016
Industry Update
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
We update our introductory guide to the KBW Nasdaq Index family. In this edition, we include the KBW Nasdaq
Financial Technology Index (KFTX), which was recently launched on July 18.
We provide an overview of the KBW Nasdaq Index
family, which includes ten listed indexes focused on the
financial services sector and its sub-industry groups.
Portfolio (KBWD) tracks the KDX.
PowerShares KBW Premium Yield Equity REIT
Portfolio (KBWY) tracks the KYX.
We introduced a new Index to the family on July
18th, the KBW Nasdaq Financial Technology Index.
For a comprehensive review of KFTX, please refer
to: Introducing the KBW Nasdaq Financial
Technology Index.
The pages that follow within this note serve as an
introductory guide to these KBW Nasdaq Indexes and
provide a snapshot of the Indexes as of July 29, 2016.
There are three bank-focused indexes:
KBW Nasdaq Global Bank Index (GBKX)
KBW Nasdaq Bank Index (BKX)
KBW Nasdaq Regional Banking Index (KRX)
There are two insurance-focused indexes:
KBW Nasdaq Insurance Index (KIX)
KBW Nasdaq Property & Casualty Insurance
Index (KPX)
There are two financial dividend-yield-focused
indexes:
KBW Nasdaq Financial Sector Dividend Yield
Index (KDX)
KBW Nasdaq Premium Yield Equity REIT
Index (KYX)
There is a capital-markets-focused index:
KBW Nasdaq Capital Markets Index (KSX)
There is a mortgage-finance-focused index:
KBW Nasdaq Mortgage Finance Index (MFX)
Lastly, there is a new financial technology-focused
index:
KBW Nasdaq Financial Technology Index
(KFTX)
KBW and Nasdaq partnered with Invesco
PowerShares to offer investors five ETFs based on
several of these indexes:
PowerShares KBW Bank Portfolio (KBWB) tracks
the BKX.
PowerShares KBW Regional Banking Portfolio
(KBWR) tracks the KRX.
PowerShares KBW Property & Casualty Insurance
Portfolio (KBWP) tracks the KPX.
PowerShares KBW High Dividend Yield Financial
Melissa A. Roberts
Frederick Cannon, CFA
212 887 3820
[email protected]
212 887 3887
[email protected]
Pell Bermingham
212 887 8699
[email protected]
Glossary of Terms
Keefe, Bruyette & Woods, Inc. does and seeks to do business with companies covered in its research reports. As a result, investors
should be aware that the firm may have a conflict of interest that could affect the objectivity of this report. Investors should
consider this report as only a single factor in making their investment decision.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
ETF
SYMBOL
ETF NAME
Tracks the performance of leading banks and thrifts that are
publicly-traded in the U.S. The Index includes banking stocks
representing large U.S. national money centers, regional banks and
thrift institutions.
KBWB
PowerShares KBW Bank Portfolio
Modified MarketCapitalization
Weighted
Tracks the performance of U.S. regional banks and thrifts that are
publicly traded in the U.S.
KBWR
PowerShares KBW Regional Banking Portfolio
KBW Nasdaq Insurance Index
Modified MarketCapitalization
Weighted
Tracks the performance of U.S. companies in the insurance
industry.
KPX
KBW Nasdaq Property & Casualty Insurance Index
Modified MarketCapitalization
Weighted
Tracks the performance of U.S. property & casualty insurance
companies.
KBWP
PowerShares KBW Property & Casualty Insurance Portfolio
FinTech
KFTX
KBW Nasdaq Financial Technology Index
Equal Weighted
Tracks the performance of companies that are publicly traded in the
U.S. and leverage technology to deliver financial products and
services.
CAP
MKTS
KSX
KBW Nasdaq Capital Markets Index
Modified MarketCapitalization
Weighted
Tracks the performance of companies that conduct business as
broker-dealers, asset managers, trust and custody banks or
exchanges that are publicly traded in the U.S.
MORT.
FIN.
A Guide to the KBW Nasdaq Index Family
MFX
KBW Nasdaq Mortgage Financial Index
Modified MarketCapitalization
Weighted
Tracks the performance of mortgage REITs and those real estate
companies engaged in mortgage finances-related activities that are
publicly traded in the U.S.
KYX
KBW Nasdaq Premium Yield Equity REIT Index
Modified Dividend
Yield Weighted
Tracks the performance of domestic equity REITs that are publiclytraded in the U.S with competitive dividend yields.
KBWY
PowerShares KBW Premium Yield Equity REIT Portfolio
KDX
KBW Nasdaq Financial Sector Dividend Yield Index
Modified Dividend
Yield Weighted
Tracks the performance of financial companies that are publiclytraded in the U.S with competitive dividend yields. The Index
includes companies principally engaged in the business of
providing financial services and products.
KBWD
PowerShares KBW High Dividend Yield Financial Portfolio
BANKS
INSURANCE
INDEX
SYMBOL
INDEX NAME
METHODOLOGY
DESCRIPTION
GBKX
KBW Nasdaq Global Bank Index
Equal Weighted
Tracks the performance of leading banks that have been classified
as Globally Systematically Important by the Basel Committee. The
Index is comprised of those banks that are publicly traded on globaleligible exchanges.
BKX
KBW Nasdaq Bank Index
Modified MarketCapitalization
Weighted
KRX
KBW Nasdaq Regional Banking Index
KIX
YIELD
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EXPOSURE
Source: KBW Research
Please refer to important disclosures and analyst certification information on pages 24 - 27.
2
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
KBW NASDAQ FAMILY OF INDEXES: UNDERSTANDING QUARTERLY REBALANCE METHODOLOGIES
INDEX
TICKER
ETF
TICKER
INDEX
BKX
KBWB
KBW Nasdaq Bank Index
KPX
KBWP
KBW Nasdaq Property & Casualty Insurance Index
KSX
KBW Nasdaq Capital Markets Index
KIX
KBW Nasdaq Insurance Index
MFX
KBW Nasdaq Mortgage Finance Index
WEIGHTING
METHODOLOGY
QUARTERLY REBALANCING METHODOLOGY
Rebalanced quarterly such that the maximum weight of any Index Security does not exceed 8% and no more than 5
securities are at that cap. The excess weight of any capped security is distributed proportionally across the remaining Index
Securities.
Modified Market Capitalization
Weighted
If after redistribution, any of the 5 highest ranked Index Securities are weighted below 4%, these securities are not capped.
Next, any remaining Index Securities in excess of 4% are capped at 4% and the excess weight is redistributed
proportionally across the remaining Index Securities.
The process is repeated, if necessary, to derive the final weights.
The Index is rebalanced quarterly such that the maximum weight of any Index Security does not exceed 4% and no more
than 5 securities are at that cap. The excess weight of any capped security is distributed proportionally across the
remaining Index Securities.
KRX
KBWR
KBW Nasdaq Regional Banking Index
Modified Market Capitalization
Weighted
If after redistribution, any of the 5 highest ranked Index Securities are weighted below 4%, these securities are not capped.
Next, any remaining Index Securities in excess of 2% are capped at 2% and the excess weight will be redistributed
proportionally across the remaining Index Securities.
The process is repeated, if necessary, to derive the final weights.
KFTX
KBW Nasdaq Financial Technology Index
The Index employs an equal dollar weighted methodology such that each company’s Index market value is rebalanced
quarterly to an equal dollar value corresponding to an equal percent weight of the Index’s aggregate market value.
Equal Weighted
Index Shares are calculated by dividing this equal dollar value for each Index Security by the corresponding last sale price
of the security
GBKX
KBW Nasdaq Global Bank Index
Rebalanced quarterly based on the indicated dividend yield of each security as compared to the dividend yield of all Index
Securities as of the last trading day in February, May, August and November.
KDX
KBWD
KBW Nasdaq Financial Sector Dividend Yield Index
The Index is rebalanced such that the maximum weight of any Index Security does not exceed 8% and no more than 5
securities are at that cap. The excess weight of any capped security is distributed proportionally across the remaining Index
Securities.
Modified Dividend Yield Weighted
If after redistribution, any of the 5 highest ranked Index Securities are weighted below 8%, these securities are not capped.
KYX
KBWY
KBW Nasdaq Premium Yield Equity REIT Index
Next, any remaining Index Securities in excess of 4% are capped at 4% and the excess weight will be redistributed
proportionally across the remaining Index Securities.
The process is repeated, if necessary, to derive the final weights.
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
3
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Nasdaq Financial Technology Index (KFTX)
Quick Facts
Weighting Methodology:
Index Currency:
Rebalancing Frequency:
Inception Date:
Equally Weighted
USD
Quarterly after the close on the third Friday of March, June, September and December
July 18, 2016
Index Characteristics
as of July 29. 2016
# of Components:
Index Fundamentals
49
Trailing P/E
Index Market Cap ($M):
49,905
Forward P/E
Largest Component Market Cap ($M):
Smallest Component Market Cap ($M):
Median Component Market Cap ($M):
Largest Component Weight (%)
Smallest Component Weight (%)
59,547
720
5,790
2.30
1.95
Trailing Positive P/E
Forward Positive P/E
Price to Book
Dividend Yield (%)
Divisor (M)
Historical Performance
as of July 29. 2016
36.5
19.5
27.7
18.6
4.1
0.84%
49
as of July 29. 2016
660
560
460
360
260
160
KBW Nasdaq Financial Texhnology Index (KFTX)
2016
2015
2014
2013
2012
2011
2010
60
2009
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
Description
The KBW Nasdaq Financial Technology Index is an equal weighted index designed to track the performance of U.S. companies that leverage technology to deliver financial
products and services, using nearly exclusively electronic distribution, with limited to no "bricks and mortar," and derive the bulk of their revenue from fee-based sources.
KBW Nasdaq Financial Texhnology Total Return Index (KFTXT)
Methodology
Source: KBW Research, Nasdaq
Index Holdings are subject to change. An investor cannot invest directly in an in Index.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
4
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
KFTX Members as of 7/29/16
Ticker Company Name
ACIW
ACI Worldwide, Inc.
ADS
Alliance Data Systems Corp.
AXP
American Express Co.
BKFS
Black Knight Financial Services, Inc.
BOFI
BofI Holding, Inc.
BR
Broadridge Financial Solutions, Inc.
CATM
Cardtronics, Inc.
CBOE
CBOE Holdings, Inc.
CLGX
CoreLogic, Inc.
CME
CME Group, Inc.
DNB
Dun & Bradstreet Corp.
EEFT
Euronet Worldwide, Inc.
EFX
Equifax, Inc.
ENV
Envestnet, Inc.
EVER
EverBank Financial Corp.
EVTC
EVERTEC, Inc.
FDC
First Data Corp.
FDS
FactSet Research Systems Inc.
FICO
Fair Isaac Corp.
FIS
Fidelity National Information Services, Inc.
FISV
Fiserv, Inc.
FLT
FleetCor Technologies, Inc.
GDOT
Green Dot Corp.
GPN
Global Payments, Inc.
HAWK Blackhawk Network Holdings, Inc.
ICE
Intercontinental Exchange, Inc.
INFO
IHS Markit Ltd
JKHY
Jack Henry & Associates, Inc.
LC
LendingClub Corp.
MA
MasterCard, Inc.
MCO
Moody's Corp.
MKTX
MarketAxess Holdings, Inc.
MSCI
MSCI, Inc.
NDAQ
Nasdaq, Inc.
PAY
VeriFone Systems, Inc.
PYPL
PayPal Holdings, Inc.
RATE
Bankrate, Inc.
SEIC
SEI Investments Co.
SPGI
S&P Global, Inc.
SQ
Square, Inc.
SSNC
SS&C Technologies Holdings, Inc.
TRI
Thomson Reuters Corp.
TSS
Total System Services, Inc.
V
Visa, Inc.
VIRT
Virtu Financial, Inc.
VNTV
Vantiv, Inc.
VRSK
Verisk Analytics, Inc.
WEX
WEX, Inc.
WU
The Western Union Co.
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
5
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Nasdaq Global Bank Index (GBKX)
Quick Facts
Weighting Methodology:
Index Currency:
Rebalancing Frequency:
Inception Date:
Equally Weighted
USD
Quarterly after the close on the third Friday of March, June, September and December
July 13, 2015
Index Characteristics
as of July 29. 2016
Index Fundamentals
# of Components:
Index Market Cap ($M):
Largest Component Market Cap ($M):
Smallest Component Market Cap ($M):
Median Component Market Cap ($M):
Largest Component Weight (%)
Smallest Component Weight (%)
Historical Performance
28
Trailing P/E
2,821
Forward P/E
7,389,057
15,491
77,468
278.17
0.69
Trailing Positive P/E
Forward Positive P/E
Price to Book
Dividend Yield (%)
Divisor (M)
as of July 29. 2016
10.8
6.4
7.8
6.4
0.6
3.75%
8,354
as of July 29. 2016
130
90
KBW Nasdaq Global Bank Index (GBKX)
2015
2014
2013
2012
2011
2010
50
2009
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
Description
The KBW Nasdaq Global Bank Index is designed to track the performance of leading banks that have been classified as Globally Systematically Important by the Basel
Committee. The Index is comprised of those banks that are publicly traded on global-eligible exchanges.
KBW Nasdaq Global Bank Total Return Index (GBKXT)
Methodology
Source: KBW Research, Nasdaq
Index Holdings are subject to change. An investor cannot invest directly in an in Index.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
6
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
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GBKX Members as of 7/29/16
Ticker Company Name
1288
Agricultural Bank of China Ltd
SAN
Banco Santander SA
BAC
Bank of America Corp
3988
Bank of China Ltd
BK
Bank of New York Mellon Corp/The
BARC
Barclays PLC
BNP
BNP Paribas SA
939
China Construction Bank Corp
C
Citigroup Inc
CSGN
Credit Suisse Group AG
DBK
Deutsche Bank AG
GS
Goldman Sachs Group Inc/The
HSBA
HSBC Holdings PLC
1398
ICBC
INGA
ING Groep NV
JPM
JPMorgan Chase & Co
8306
Mitsubishi UFJ Financial Group Inc
8411
Mizuho Financial Group Inc
MS
Morgan Stanley
NDA
Nordea Bank AB
RBS
Royal Bank of Scotland Group PLC
GLE
Societe Generale SA
STAN
Standard Chartered PLC
STT
State Street Corp
8316
Sumitomo Mitsui Financial Group Inc
UBSG
UBS Group AG
UCG
UniCredit SpA
WFC
Wells Fargo & Co
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
7
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Nasdaq Bank Index (BKX)
Quick Facts
Weighting Methodology:
Index Currency:
Rebalancing Frequency:
Inception Date:
Modified market capitalization weighted
USD
Quarterly after the close on the third Friday of March, June, September and December
October 21, 1991
ETF
Symbol
KBWB
Name
PowerShares KBW Bank Portfolio
Index Characteristics
as of July 29. 2016
# of Components:
Index Market Cap ($B):
Largest Component Market Cap ($M):
Smallest Component Market Cap ($M):
Median Component Market Cap ($M):
Largest Component Weight (%)
Smallest Component Weight (%)
Sponsor
Invesco PowerShares
Index Fundamentals
24
1,141
243,546
4,713
16,765
6,486
171
Historical Performance
Trailing P/E
Forward P/E
Trailing Positive P/E
Forward Positive P/E
Price to Book
Dividend Yield (%)
Divisor (M)
as of July 29. 2016
12.6
11.5
12.3
11.5
1.0
2.43%
16,919
as of July 29. 2016
250
200
150
100
50
KBW Nasdaq Bank Index (BKX)
2015
2014
2013
2012
2011
2010
0
2009
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
Description
The KBW Nasdaq Bank Index is designed to track the performance of the leading banks and thrifts that are publicly-traded in the U.S.
The Index includes 24 banking stocks representing the large U.S. national money centers, regional banks, and thrift institutions.
KBW Nasdaq Bank Total Return Index (BKXTR)
Methodology
Source: KBW Research, Nasdaq
Index Holdings are subject to change. An investor cannot invest directly in an in Index.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
8
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
BKX Members as of 7/29/16
Ticker Company Name
BAC
Bank of America Corp.
BBT
BB&T Corp.
BK
The Bank of New York Mellon Corp.
C
Citigroup, Inc.
CFG
Citizens Financial Group, Inc.
CMA
Comerica, Inc.
COF
Capital One Financial Corp.
FITB
Fifth Third Bancorp
FRC
First Republic Bank, Inc.
HBAN
Huntington Bancshares, Inc.
JPM
JPMorgan Chase & Co.
KEY
KeyCorp
MTB
M&T Bank Corp.
NTRS
Northern Trust Corp.
NYCB
New York Community Bancorp, Inc.
PBCT
People's United Financial, Inc.
PNC
The PNC Financial Services Group, Inc.
RF
Regions Financial Corp.
SIVB
SVB Financial Group
STI
SunTrust Banks, Inc.
STT
State Street Corp.
USB
U.S. Bancorp
WFC
Wells Fargo & Co.
ZION
Zions Bancorp.
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
9
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Nasdaq Regional Banking Index (KRX)
Description
Quick Facts
Weighting Methodology:
Index Currency:
Rebalancing Frequency:
Inception Date:
Modified market capitalization weighted
USD
Quarterly after the close on the third Friday of March, June, September and December
July 25, 2005
ETF
Symbol
KBWR
Name
PowerShares KBW Regional Banking Portfolio
Index Characteristics
as of July 29. 2016
# of Components:
Sponsor
Invesco PowerShares
Index Fundamentals
50
Index Market Cap ($M):
Largest Component Market Cap ($M):
Smallest Component Market Cap ($M):
Median Component Market Cap ($M):
Largest Component Weight (%)
Smallest Component Weight (%)
Historical Performance
Trailing P/E
130,088
6,385
700
2,400
282.80
21.68
as of July 29. 2016
16.4
Forward P/E
Trailing Positive P/E
Forward Positive P/E
Price to Book
Dividend Yield (%)
Divisor (M)
14.7
16.4
14.7
1.4
2.54%
1,596
as of July 29. 2016
240
220
200
180
160
140
120
100
KBW Nasdaq Regional Banking Index (KRX)
2015
2014
2013
2012
2011
2010
80
2009
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
The KBW Nasdaq Regional Banking Index is designed to track the performance of U.S. regional banks and thrifts that are publicly traded in the U.S.
KBW Nasdaq Regional Banking Total Return Index (KRXTR)
Methodology
Source: KBW Research, Nasdaq
Index Holdings are subject to change. An investor cannot invest directly in an in Index.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
10
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
KRX Members as of 7/29/16
Ticker Company Name
ASB
Associated Banc-Corp.
BKU
BankUnited, Inc.
BOH
Bank of Hawaii Corp.
BOKF
BOK Financial Corp.
BPFH
Boston Private Financial Holdings, Inc.
BRKL
Brookline Bancorp, Inc.
BXS
BancorpSouth, Inc.
CATY
Cathay General Bancorp
CBSH
Commerce Bancshares, Inc.
CBU
Community Bank System, Inc.
CFR
Cullen/Frost Bankers, Inc.
CHCO City Holding Co.
COLB
Columbia Banking System, Inc.
CVBF
CVB Financial Corp.
EWBC East West Bancorp, Inc.
FCF
First Commonwealth Financial Corp.
FFBC
First Financial Bancorp
FFIN
First Financial Bankshares, Inc.
FHN
First Horizon National Corp.
FMBI
First Midwest Bancorp, Inc.
FNB
F.N.B. Corp.
FULT
Fulton Financial Corp.
GBCI
Glacier Bancorp, Inc.
HBHC
Hancock Holding Co.
IBKC
IBERIABANK Corp.
ISBC
Investors Bancorp, Inc.
MBFI
MB Financial, Inc.
ONB
Old National Bancorp
OZRK
Bank of the Ozarks, Inc.
PACW PacWest Bancorp
PB
Prosperity Bancshares, Inc.
PFS
Provident Financial Services, Inc.
PNFP
Pinnacle Financial Partners, Inc.
PRK
Park National Corp.
PVTB
PrivateBancorp, Inc.
SBNY
Signature Bank
SNV
Synovus Financial Corp.
STBA
S&T Bancorp, Inc.
TCB
TCF Financial Corp.
TCBI
Texas Capital Bancshares, Inc.
TRMK
Trustmark Corp.
UBSI
United Bankshares, Inc.
UMBF
UMB Financial Corp.
UMPQ Umpqua Holdings Corp.
VLY
Valley National Bancorp
WABC Westamerica Bancorp
WAFD Washington Federal, Inc.
WAL
Western Alliance Bancorp
WBS
Webster Financial Corp.
WTFC Wintrust Financial Corp.
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
11
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Nasdaq Insurance Index (KIX)
Quick Facts
Weighting Methodology:
Index Currency:
Rebalancing Frequency:
Inception Date:
Modified market capitalization weighted
USD
Quarterly after the close on the third Friday of March, June, September and December
September 1, 2003
Index Characteristics
as of July 29. 2016
# of Components:
Index Fundamentals
24
Index Market Cap ($M):
Largest Component Market Cap ($M):
Smallest Component Market Cap ($M):
Median Component Market Cap ($M):
Largest Component Weight (%)
Smallest Component Weight (%)
Historical Performance
Trailing P/E
442,110
60,920
1,159
12,905
893.00
75.85
as of July 29. 2016
13.5
Forward P/E
Trailing Positive P/E
Forward Positive P/E
Price to Book
Dividend Yield (%)
Divisor (M)
11.3
11.8
11.3
1.1
2.43%
2,157
as of July 29. 2016
260
240
220
200
180
160
140
120
100
KBW Nasdaq Insurance Index (KIX)
2015
2014
2013
2012
2011
2010
80
2009
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
Description
The KBW Nasdaq Insurance Index is designed to track the performance of U.S. companies in the insurance industry.
KBW Nasdaq Insurance Total Return Index (KIXTR)
Methodology
Source: KBW Research, Nasdaq
Index Holdings are subject to change. An investor cannot invest directly in an in Index.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
12
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
KIX Members as of 7/29/16
Ticker Company Name
ACGL
Arch Capital Group Ltd.
AFL
Aflac, Inc.
AIG
American International Group, Inc.
AIZ
Assurant, Inc.
ALL
The Allstate Corp.
AMP
Ameriprise Financial, Inc.
AON
Aon Plc
AXS
AXIS Capital Holdings Ltd.
CINF
Cincinnati Financial Corp.
FNF
Fidelity National Financial, Inc.
GNW
Genworth Financial, Inc.
HIG
The Hartford Financial Services Group, Inc.
LNC
Lincoln National Corp.
MBI
MBIA, Inc.
MET
MetLife, Inc.
MMC
Marsh & McLennan Cos., Inc.
MTG
MGIC Investment Corp.
PFG
The Principal Financial Group, Inc.
PGR
Progressive Corp.
PRU
Prudential Financial, Inc.
RE
Everest Re Group Ltd.
TRV
The Travelers Cos., Inc.
UNM
Unum Group
XL
XL Group Ltd.
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
13
August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Nasdaq Property & Casualty Insurance Index (KPX)
Description
Quick Facts
Weighting Methodology:
Index Currency:
Rebalancing Frequency:
Inception Date:
Modified market capitalization weighted
USD
Quarterly after the close on the third Friday of March, June, September and December
October 1, 2004
ETF
Symbol
KBWP
Name
PowerShares KBW Property & Casualty Insurance Portfolio
Index Characteristics
as of July 29. 2016
Sponsor
Invesco PowerShares
Index Fundamentals
# of Components:
24
Index Market Cap ($M):
Largest Component Market Cap ($M):
Smallest Component Market Cap ($M):
Median Component Market Cap ($M):
Largest Component Weight (%)
Smallest Component Weight (%)
Historical Performance
Trailing P/E
240,585
58,181
1,752
4,941
573.63
53.32
Forward P/E
Trailing Positive P/E
Forward Positive P/E
Price to Book
Dividend Yield (%)
Divisor (M)
as of July 29. 2016
14.3
15.2
14.3
15.2
1.3
2.15%
438
as of July 29. 2016
280
260
240
220
200
180
160
140
120
100
KBW Nasdaq Property & Casualty Insurance Index (KIX)
2015
2014
2013
2012
2011
2010
80
2009
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
The KBW Nasdaq Property & Casualty Insurance Index seeks to reflect the performance of U.S. property and casualty insurance companies.
KBW Nasdaq Property & Casualty Insurance Total Return Index (KIXTR)
Methodology
Source: KBW Research, Nasdaq
Index Holdings are subject to change. An investor cannot invest directly in an in Index.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
KPX Members as of 7/29/16
Ticker Company Name
ACGL
Arch Capital Group Ltd.
AFG
American Financial Group, Inc.
AFSI
AmTrust Financial Services, Inc.
AHL
Aspen Insurance Holdings Ltd.
AIZ
Assurant, Inc.
ALL
The Allstate Corp.
AWH
Allied World Assurance Co. Holdings AG
AXS
AXIS Capital Holdings Ltd.
CB
Chubb Ltd.
CINF
Cincinnati Financial Corp.
ENH
Endurance Specialty Holdings Ltd.
KMPR
Kemper Corp.
MCY
Mercury General Corp.
PGR
Progressive Corp.
PRA
ProAssurance Corp.
RE
Everest Re Group Ltd.
RLI
RLI Corp.
RNR
RenaissanceRe Holdings Ltd.
SIGI
Selective Insurance Group, Inc.
THG
The Hanover Insurance Group, Inc.
TRV
The Travelers Cos., Inc.
VR
Validus Holdings Ltd.
WRB
W.R. Berkley Corp.
XL
XL Group Ltd.
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Nasdaq Financial Sector Dividend Yield Index (KDX)
Quick Facts
Weighting Methodology:
Index Currency:
Rebalancing Frequency:
Inception Date:
Modified dividend yield weighted
USD
Quarterly after the close on the third Friday of March, June, September and December
December 1, 2006
ETF
Symbol
KBWD
Name
Sponsor
PowerShares KBW High Dividend Yield Financial Portfolio Invesco PowerShares
Index Characteristics
as of July 29. 2016
# of Components:
Index Fundamentals
37
Index Market Cap ($M):
Largest Component Market Cap ($M):
Smallest Component Market Cap ($M):
Median Component Market Cap ($M):
Largest Component Weight (%)
Smallest Component Weight (%)
Historical Performance
Trailing P/E
1,036,267
6,484
320
1,513
8689.92
268.20
Forward P/E
Trailing Positive P/E
Forward Positive P/E
Price to Book
Dividend Yield (%)
Divisor (M)
as of July 29. 2016
-7.2
14.2
7.2
0.9
10.89%
7,892
as of July 29. 2016
220
200
180
160
140
120
100
KBW Nasdaq Financial Sector Dividend Yield Index (KDX)
2015
2014
2013
2012
2011
2010
80
2009
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
Description
The KBW Financial Sector Dividend Yield Index is a dividend yield weighted index consisting of U.S. financial companies with high dividend yields that are principally engaged
in the business of providing financial services and products, including banking, insurance and diversified financial services.
KBW Nasdaq Financial Sector Dividend Yield Total Return Index (KDXTR)
Methodology
Source: KBW Research, Nasdaq
Index Holdings are subject to change. An investor cannot invest directly in an in Index.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
KDX Members as of 7/29/16
Ticker Company Name
AGNC
American Capital Agency Corp.
AI
Arlington Asset Investment Corp.
AINV
Apollo Investment Corp.
AMTG
Apollo Residential Mortgage, Inc.
APAM
Artisan Partners Asset Management, Inc.
ARCC
Ares Capital Corp.
ARR
ARMOUR Residential REIT, Inc.
BGCP
BGC Partners, Inc.
CIM
Chimera Investment Corp.
FII
Federated Investors, Inc.
GHL
Greenhill & Co., Inc.
HTGC
Hercules Capital, Inc.
MCC
Medley Capital Corp.
MCY
Mercury General Corp.
MHLD
Maiden Holdings Ltd.
MITT
AG Mortgage Investment Trust, Inc.
NAVI
Navient Corp.
NRZ
New Residential Investment Corp.
NSAM
Northstar Asset Management Group, Inc.
NWBI
Northwest Bancshares, Inc.
ORI
Old Republic International Corp.
ORIT
Oritani Financial Corp.
PACW PacWest Bancorp
PBCT
People's United Financial, Inc.
PNNT
PennantPark Investment Corp.
RESI
Altisource Residential Corp.
RSO
Resource Capital Corp.
TCAP
Triangle Capital Corp.
TCRD
THL Credit, Inc.
TGH
Textainer Group Holdings Ltd.
TRMK
Trustmark Corp.
TRST
TrustCo Bank Corp. NY
UBNK
United Financial Bancorp, Inc.
UMPQ Umpqua Holdings Corp.
VIRT
Virtu Financial, Inc.
VLY
Valley National Bancorp
WDR
Waddell & Reed Financial, Inc.
WMC
Western Asset Mortgage Capital Corp.
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Nasdaq Premium Yield Equity REIT Index (KYX)
Quick Facts
Weighting Methodology:
Index Currency:
Rebalancing Frequency:
Inception Date:
Modified dividend yield weighted
USD
Quarterly after the close on the third Friday of March, June, September and December
December 1, 2006
ETF
Symbol
KBWY
Name
PowerShares KBW Premium Yield Equity REIT Portfolio
Index Characteristics
as of July 29. 2016
# of Components:
Historical Performance
Sponsor
Invesco PowerShares
Index Fundamentals
31
Index Market Cap ($M):
Largest Component Market Cap ($M):
Smallest Component Market Cap ($M):
Median Component Market Cap ($M):
Largest Component Weight (%)
Smallest Component Weight (%)
Trailing P/E
1,149,756
10,008
296
1,825
8582.75
342.29
Forward P/E
Trailing Positive P/E
Forward Positive P/E
Price to Book
Dividend Yield (%)
Divisor (M)
as of July 29. 2016
-41.3
26.5
27.4
1.7
6.89%
11,380
as of July 29. 2016
KBW Nasdaq Premium Yield Equity REIT Index (KYX)
2015
2014
2013
2012
2011
2010
300
280
260
240
220
200
180
160
140
120
100
80
2009
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
Description
The KBW Premium Yield Equity REIT Index is designed to track the performance of domestic equity REITs that are publicly-traded in the U.S. with competitive dividend
yields.
KBW Nasdaq Premium Yield Equity REIT Total Return Index (KYXTR)
Methodology
Source: KBW Research, Nasdaq
Index Holdings are subject to change. An investor cannot invest directly in an in Index.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
KYX Members as of 7/29/16
Ticker Company Name
AHH
Armada Hoffler Properties, Inc.
AHT
Ashford Hospitality Trust, Inc.
APTS
Preferred Apartment Communities, Inc.
CBL
CBL & Associates Properties, Inc.
CCP
Care Capital Properties, Inc.
CHCT
Community Healthcare Trust, Inc.
CXW
Corrections Corp. of America
EPR
EPR Properties
FSP
Franklin Street Properties Corp.
GEO
The GEO Group, Inc.
GLPI
Gaming & Leisure Properties, Inc.
GNL
Global Net Lease, Inc.
GOOD Gladstone Commercial Corp.
GOV
Government Properties Income Trust
GPT
Gramercy Property Trust
HPT
Hospitality Properties Trust
IRET
Investors Real Estate Trust
IRT
Independence Realty Trust, Inc.
LXP
Lexington Realty Trust
MNR
Monmouth Real Estate Investment Corp.
MPW
Medical Properties Trust, Inc.
SBRA
Sabra Health Care REIT, Inc.
SNH
Senior Housing Properties Trust
SNR
New Senior Investment Group, Inc.
SRC
Spirit Realty Capital, Inc.
STAG
STAG Industrial, Inc.
VER
VEREIT, Inc.
WPG
WP GLIMCHER, Inc.
WSR
Whitestone REIT
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Nasdaq Capital Markets Index (KSX)
Quick Facts
Weighting Methodology:
Index Currency:
Rebalancing Frequency:
Inception Date:
Modified market capitalization weighted
USD
Quarterly after the close on the third Friday of March, June, September and December
November 17, 2004
Index Characteristics
as of July 29. 2016
# of Components:
Index Fundamentals
24
Index Market Cap ($M):
Largest Component Market Cap ($M):
Smallest Component Market Cap ($M):
Median Component Market Cap ($M):
Largest Component Weight (%)
Smallest Component Weight (%)
Historical Performance
Trailing P/E
429,098
68,955
555
11,801
1268.59
64.03
as of July 29. 2016
16.7
Forward P/E
Trailing Positive P/E
Forward Positive P/E
Price to Book
Dividend Yield (%)
Divisor (M)
14.5
16.1
14.5
1.7
2.19%
1,575
as of July 29. 2016
200
180
160
140
120
100
80
KBW Nasdaq Capital Markets Index (KSX)
2015
2014
2013
2012
2011
2010
60
2009
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
Description
The KBW Nasdaq Capital Markets Index is designed to track the performance of companies that conduct business as broker-dealers, asset managers, trust and custody
banks or exchanges that are publicly traded in the U.S.
KBW Nasdaq Capital Markets Total Return Index (KSXTR)
Methodology
Source: KBW Research, Nasdaq
Index Holdings are subject to change. An investor cannot invest directly in an in Index.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
KSX Members as of 7/29/16
Ticker Company Name
AMTD
TD Ameritrade Holding Corp.
BEN
Franklin Resources, Inc.
BLK
BlackRock, Inc.
CBOE
CBOE Holdings, Inc.
CME
CME Group, Inc.
EV
Eaton Vance Corp.
GHL
Greenhill & Co., Inc.
GS
The Goldman Sachs Group, Inc.
IBKR
Interactive Brokers Group, Inc.
ICE
Intercontinental Exchange, Inc.
ITG
Investment Technology Group, Inc.
IVZ
Invesco Ltd.
JNS
Janus Capital Group, Inc.
KCG
KCG Holdings, Inc.
LAZ
Lazard Ltd.
LM
Legg Mason, Inc.
MS
Morgan Stanley
NDAQ
Nasdaq, Inc.
PJC
Piper Jaffray Cos.
RJF
Raymond James Financial, Inc.
SCHW The Charles Schwab Corp.
SEIC
SEI Investments Co.
STT
State Street Corp.
TROW T. Rowe Price Group, Inc.
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Nasdaq Mortgage Finance Index (MFX)
Quick Facts
Weighting Methodology:
Index Currency:
Rebalancing Frequency:
Inception Date:
Modified market capitalization weighted
USD
Quarterly after the close on the third Friday of March, June, September and December
July 25, 2005
Index Characteristics
as of July 29. 2016
Index Fundamentals
24
Trailing P/E
as of July 29. 2016
22.0
Index Market Cap ($M):
96,803
Forward P/E
11.5
Largest Component Market Cap ($M):
Smallest Component Market Cap ($M):
Median Component Market Cap ($M):
Largest Component Weight (%)
Smallest Component Weight (%)
12,241
248
2,607
699.57
47.36
Trailing Positive P/E
Forward Positive P/E
Price to Book
Dividend Yield (%)
Divisor (M)
# of Components:
Historical Performance
12.4
11.2
1.2
2.79%
2,804
as of July 29. 2016
220
200
180
160
140
120
100
80
KBW Nasdaq Mortgage Finance Index (KYX)
2015
2014
2013
2012
2011
2010
60
2009
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
Description
The KBW Nasdaq Mortgage Finance Index is designed to track the performance of mortgage REITs and those real estate companies engaged in mortgage finance-related
activities that are publicly-traded in the U.S.
KBW Nasdaq Mortgage Finance Total Return Index (KYXTR)
Methodology
Source: KBW Research, Nasdaq
Index Holdings are subject to change. An investor cannot invest directly in an in Index.
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
MFX Members as of 7/29/16
Ticker Company
AGNC
American Capital Agency Corp.
AVHI
AV Homes, Inc.
BPOP
Popular, Inc.
CFFN
Capitol Federal Financial, Inc.
DHI
D.R. Horton, Inc.
FAF
First American Financial Corp.
FNF
Fidelity National Financial, Inc.
KBH
KB Home
LEN
Lennar Corp.
MDC
M.D.C. Holdings, Inc.
MTG
MGIC Investment Corp.
MTH
Meritage Homes Corp.
NLY
Annaly Capital Management, Inc.
NSM
Nationstar Mortgage Holdings, Inc.
OCN
Ocwen Financial Corp.
ORI
Old Republic International Corp.
PHH
PHH Corp.
PHM
PulteGroup, Inc.
PMT
PennyMac Mortgage Investment Trust
RDN
Radian Group, Inc.
TFSL
TFS Financial Corp.
TOL
Toll Brothers, Inc.
UCBI
United Community Banks, Inc.
WAFD Washington Federal, Inc.
Source: KBW Research, Nasdaq
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
IMPORTANT DISCLOSURES
RESEARCH ANALYST CERTIFICATION: We, Melissa A. Roberts, Frederick Cannon, CFA and Pell Bermingham, hereby certify that the
views expressed in this research report accurately reflect our personal views about the subject companies and their securities. We also certify that
we have not been, and will not be receiving direct or indirect compensation in exchange for expressing the specific recommendation in this report.
Analysts’ Compensation: The equity research analysts responsible for the preparation of this report receive compensation based upon various
factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues
from, among other business units, Institutional Equities and Investment Banking.
The recommendations contained in this report were produced at 2 August 2016 14:06 EDT and disseminated at 2 August 2016 14:06 EDT
For disclosures pertaining to recommendations or estimates made on a security mentioned in this report, please see the most recently published
company report or visit our global disclosures page on our website at http://www.kbw.com/research/disclosures or see the section below titled
"Disclosure Information" for further information on how to obtain these disclosures.
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
AFFILIATE DISCLOSURES
This report has been prepared by Keefe, Bruyette & Woods, Inc. (“KBWI”) and/or its affiliate Stifel Nicolaus Europe Limited (“SNEL”), also
trading as Keefe, Bruyette & Woods Europe (“KBW Europe”); collectively “KBW”. Both KBWI and KBW Europe are affiliates of Stifel Financial
Corp. KBWI is regulated by FINRA and the United States Securities and Exchange Commission, is a member of NYSE, and its headquarters is
located at 787 7th Avenue, New York, NY 10019. Stifel Nicolaus Europe Limited, also trading as Keefe, Bruyette & Woods Europe, is registered
in England and Wales, no. 03719559 and its registered office is 4th Floor, 150 Cheapside, London EC2V 6ET. Stifel Nicolaus Europe Limited, also
trading as Keefe, Bruyette & Woods Europe, is authorised and regulated by the Financial Conduct Authority (FCA) in the UK entered on the
FCA’s register, no. 190412 and is a member of the London Stock Exchange. Disclosures in the Important Disclosures section referencing KBW
include one or all affiliated entities unless otherwise specified.
Registration of non-U.S. Analysts: Any non-U.S. Research Analyst employed by a non-U.S. affiliate of KBWI contributing to this report is not
registered/qualified as research analyst with FINRA and/or the NYSE and may not be an associated person of KBWI and therefore may not be
subject to FINRA Rule 2241 or NYSE Rule 472 restrictions on communications with a subject company, public appearances, and trading securities
held by a research analyst account.
Disclosure Information: For current company-specific disclosures, please write to one of the KBW entities: For U.S. Research: Keefe, Bruyette
& Woods, Inc. Research Department, 787 7th Avenue, 4th Floor, New York, NY 10019. For European Research: The Compliance Officer, Stifel
Nicolaus Europe Limited, 4th Floor, 150 Cheapside, London EC2V 6ET. Or visit our website at http://www.kbw.com/research/disclosures. KBW
has arrangements in place to manage conflicts of interest including information barriers between the Research Department and certain other
business groups. As a result, KBW does not disclose certain client relationships with, or compensation received from, such companies in its
research reports.
Distribution of Ratings/IB Services
KBW
*IB Serv./Past 12 Mos.
Rating
Outperform [BUY]
Market Perform [HOLD]
Underperform [SELL]
Restricted [RES]
Suspended [SP]
Covered -Not Rated [CNR]
Count
Percent
Count
Percent
200
344
45
0
29
3
32.36
55.66
7.28
0.00
4.69
0.49
77
89
11
0
4
0
38.50
25.87
24.44
0.00
13.79
0.00
* KBW maintains separate research departments; however, the above chart, "Distribution of Ratings/IB
Services," reflects combined information related to the distribution of research ratings and the receipt of
investment banking fees globally.**Note: All ratings for Keefe, Bruyette and Woods, Inc. as of January 15,
2015 reflect a relative ratings system.
Explanation of Ratings: KBW Research Department provides three core ratings: Outperform, Market Perform, and Underperform, and three
ancillary ratings: Suspended, Restricted, and Covered-Not Rated. For purposes of New York Stock Exchange Rule 472 and FINRA Rule 2241,
Outperform is classified as a Buy, Market Perform is classified as a Hold, and Underperform is classified as a Sell. Suspended indicates that
KBW’s investment rating and/or target price have been temporarily suspended due to applicable regulations and/or KBW policies. Restricted
indicates that KBW is precluded from providing an investment rating or price target due to the firm’s role in connection with a merger or other
strategic financial transaction. Covered-Not Rated indicates that KBW is not providing an investment rating and/or price target due to the lack of
publicly available information and/or its inability to adequately quantify the publicly available information to sufficiently produce such metrics.
North American Stocks and European Stocks are rated based on the share price upside to target price relative to the relevant sector index
performance on a 12-month horizon. Outperform rated stocks have a greater than 10 percentage point (“pp”) relative performance versus the sector,
Market Perform rated stocks between +10pp to -10pp relative performance versus the sector, and Underperform rated stocks a lower than 10pp
relative performance versus the sector. The 12-month price target may be determined by the stock’s fundamentally driven fair value and/or other
factors (e.g., takeover premium or illiquidity discount).
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
KBW Model Portfolio: “Model Portfolio Buy” - Companies placed on this list are expected to generate a total rate of return (percentage price
change plus dividend yield) of 10% or more over the next 3 to 6 months. “Model Portfolio Sell” - Companies placed on this list are expected to
generate a total rate of return (percentage price change plus dividend yield) at or below -10% over the next 3 to 6 months.
The purpose of the Model Portfolio is to inform institutional investors of KBWI’s short-term (as described above) outlook for a particular industry
sector. The Portfolio is not available for purchase or sale, cannot be duplicated as shown, is hypothetical and is for illustrative purposes only. For a
more detailed description of the selection criteria and other specifics related to the construction of the Model Portfolio, please refer to the January 5,
2010 Model Portfolio Primer and/or contact your KBWI representative for more information.
The Model Portfolio should be viewed as a short-term outlook of a particular industry sector, not as individual security recommendations. The
Model Portfolio uses a three-to-six-month time horizon and should not be considered when making longer term investments. KBWI Research
publishes research with a 12-month outlook on each issuer of securities contained in the Model Portfolio. Investors who are interested in a
particular security should request KBWI Research’s coverage of such securities by contacting your KBWI representative. KBW research contains
analyses of fundamentals underlying each issuer.
This report is intended for [email protected]. Unauthorized redistribution of this report is prohibited.
KBWI’s long-term recommendations may differ from recommendations made for the Model Portfolio. These differences are the result of different
time horizons—KBWI research has a 12-month outlook and the Model Portfolio has a three-to-six-month outlook.
Although the model portfolio is based upon actual performance of actual investments, KBWI did not recommend that investors purchase this
combination—or hypothetical portfolio—of investments during the time period depicted here. As this hypothetical portfolio was designed with the
benefit of hindsight, the choice of investments contained in it reflects a subjective choice by KBWI. Accordingly, this hypothetical portfolio may
reflect a choice of investments that performed better than an actual portfolio, which was recommended during the depicted time frame, would have
performed during the same time period. Moreover, unlike an actual performance record, these results do not represent actual trading wherein
market conditions or other risk factors may have caused the holder of the portfolio to liquidate or retain all or part of the represented holdings.
Stifel/KBW Income Opportunity List, Stifel/KBW Analyst Select List, and Stifel/KBW Select Income Opportunity—The Crossovers List:
These lists include companies that analysts believe have the most attractive risk-adjusted return potential over the next 12 months, or, in the case of
the Stifel/KBW Income Opportunity Ideas List, have yield in excess of 2%. In some cases, analysts who cover more than one sub-sector may have
more than one name on the list.
Other Research Methods: Please be advised that KBW provides to certain customers on request specialized research products or services that
focus on covered stocks from a particular perspective. These products or services include, but are not limited to, compilations, reviews, and analysis
that may use different research methodologies or focus on the prospects for individual stocks as compared to other covered stocks or over differing
time horizons or under assumed market events or conditions.
OTHER DISCLOSURES
Indexes: The following indexes: U.S.: KBW Nasdaq Bank Index (BKX), KBW Nasdaq Insurance Index (KIX), KBW Nasdaq Capital Markets
Index (KSX), KBW Nasdaq Regional Banking Index (KRX), KBW Nasdaq Mortgage Finance Index (MFX), KBW Nasdaq Property & Casualty
Index (KPX), KBW Nasdaq Financial Technology Index (KFTX), KBW Nasdaq Premium Yield Equity REIT Index (KYX); KBW Nasdaq
Financial Sector Dividend Yield Index (KDX) and Global: KBW Nasdaq Global Bank Index (GBKX), are the property of KBWI and Nasdaq.
KBWI and Nasdaq do not guarantee the accuracy and/or completeness of the indexes, make no express or implied warranties with respect to the
indexes and shall have no liability for any damages, claims, losses, or expenses caused by errors in the index calculation. KBWI and Nasdaq make
no representation regarding the advisability of investing in options on the Index. Past performance is not necessarily indicative of future results.
ETFs—Important Disclosures: The shares (“Shares”) of ETFs are not sponsored, endorsed, sold, or promoted by KBWI. KBWI makes no
representation or warranty, express or implied, to the owners of the Shares or any member of the public regarding the advisability of investing in
securities generally or in the Shares particularly or the ability of its Indexes to track general stock market performance. The only relationship of
KBWI to Invesco PowerShares Capital Management LLC is the licensing of certain trademarks and trade names of KBWI and its Indexes which
are determined, composed, and calculated by KBWI without regard to Invesco PowerShares Capital Management LLC, the fund, or the Shares.
KBWI has no obligation to take the needs of Invesco PowerShares Capital Management LLC or the owners of the shares into consideration in
determining, composing, or calculating the Indexes. KBWI is not responsible for and has not participated in any determination or calculation made
with respect to issuance or redemption of the Shares. KBWI has no obligation or liability in connection with the administration, marketing, or
trading of the Shares.
Compensation. KBWI and Invesco PowerShares Capital Management LLC are parties to an index licensing agreement wherein KBWI licenses its
Indexes to Invesco PowerShares Capital Management LLC and KBWI receives as compensation payments based on the amount of assets under
management in the ETFs (which the licensed Indexes underlie) and which may be recommended in this report.
ETF and Index Reports. The author of index and related ETF reports is the Director of KBWI’s Research Department, who is also the head of the
KBWI Index Committee. This Index Committee selects index components for the indexes upon which the recommended ETFs are based.
ETF Risks. There are risks involved with investing in ETFs, including possible loss of money. ETFs may not always trade or price as expected.
Generally, security classifications used in calculating allocation tables are as of the last trading day of the previous month. ETFs trade like stocks,
are subject to investment risk, fluctuate in market value and may trade at prices above or below the ETFs net asset value. Diversification does not
ensure a profit and may not protect against loss in declining markets. Investors should refer to the individual ETF prospectus for a more detailed
discussion of the specific risks and considerations for an individual ETF.
Investing in a single sector may be subject to more volatility than funds investing in a diverse group of sectors. Brokerage commissions and ETF
expenses will reduce returns. In general, ETFs can be expected to move up or down in value with the value of the applicable index. Although ETFs
may be bought and sold on the exchange through any brokerage account, ETFs are not individually redeemable from the Fund. Investors may
Please refer to important disclosures and analyst certification information on pages 24 - 27.
25
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Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
acquire ETFs and tender them for redemption through the Fund in Creation Unit Aggregations only, please see the prospectus (link below) for more
details. Shares are not actively managed and are subject to risks including those regarding short selling and margin maintenance requirements. Past
performance is not necessarily indicative of future results.
An investor should consider the Funds’ investment objectives, risks, charges, and expenses carefully before investing. This and other information
can be found in their prospectuses. For this and more complete information about the Funds, call InvescoPowerShares at 1-800-983-0903 or visit
https://www.powershares.com for a prospectus. The prospectus should be read carefully before investing.
Shares of the ETFs funds are not guaranteed or insured by the FDIC or by another governmental agency; they are not obligations of the FDIC nor
are they deposits or obligations of or guaranteed by KBWI or Invesco PowerShares Capital Management LLC. ETFs are distributed by Invesco
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PowerShares Capital Management LLC.
General Risk Disclosure: Investments in securities or financial instrument involve numerous risks which may include market risk, counterparty
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jurisdiction. Where net dividends to ADR investors are discussed, these are estimated, using withholding tax rate conventions, and deemed
accurate, but recipients should always consult their tax advisor for exact dividend computations.
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ASSUMPTIONS, EFFECTIVE DATE, AND UPDATES
Certain assumptions may have been made in connection with the analysis presented herein, so changes to assumptions may have a material impact
on the conclusions or statements made in this communication. Facts and views presented in this communication have not been reviewed by, and
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The information relating to any company herein is derived from publicly available sources and KBW makes no representation as to the accuracy or
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This communication has been prepared as of the date of the report.
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COPYRIGHT
Please refer to important disclosures and analyst certification information on pages 24 - 27.
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August 2, 2016
Getting to Know the KBW Nasdaq Index Family: 2nd Ed.- Welcome, KFTX!
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Please refer to important disclosures and analyst certification information on pages 24 - 27.
27