Smart Beta Investing: How to Build a Portfolio the "Smart

Transcription

NOVEMBER 12, 2014
Smart Beta Investing: How to
Build a Portfolio the "Smart"
Beta Way
TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by
TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.
© 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission.
Important Disclosures
NOVEMBER 12, 2014
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Past performance of a security, strategy or index is no guarantee of future results or success.
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Speaker
NOVEMBER 12, 2014
John Feyerer, CFA
VP, ETF Product Management
Global ETF Products & Research
Invesco Powershares Capital Management LLC

Oversees Invesco PowerShares’ product
management functions, including developing and
implementing strategies and tactics for product
positioning and coordinating product-related
marketing

Prior to joining Invesco PowerShares, John served in
a variety of operating, financial, and strategic roles
over 14 years at the ServiceMaster Company

Earned his BA/MA in Communications from Wheaton
College and an MBA with a concentration in Finance
from Layola University Chicago

Is a Chartered Financial Analyst charterholder and a
member of the CFA Society of Chicago
Smart Beta ETF Strategies
Expanding the Investor Toolbox
P-SBTD-PPT-1P
FOR US INVESTOR USE ONLY
NOT FDIC INSURED|MAY LOSE VALUE| NO BANK GUARANTEE
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Decoding the “Buzz”
The (R)evolution of Smart Beta Strategies
Portfolio Implementation Ideas
Accessing Low-Volatility Strategies
The Fundamental Index Approach
Seek a High-Conviction Management Firm
Important Information
Beta: is a measure of risk representing how a security is expected to respond to general market movements.
Smart Beta: an alternative and selection index based methodology that may outperform a benchmark or mitigate portfolio risk, or both.
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“Once you get past the moniker,
some very intelligent people are
doing some very interesting things
that intersect the world of active
and passive investing.”
Jerry Kerns
Editor-in-Chief, Morningstar Magazine
“The New Game” Morningstar Magazine, April/May 2014
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What is Smart Beta?
“The common thread among [smart beta ETFs] is that they seek to either
improve their return profile or alter their risk profile relative to more
traditional market benchmarks.” 1
–
Ben Johnson, Director of Passive Funds Research, Morningstar
COMMON DEFINITIONS FOR SMART BETA ETFS
Also Known As:
 Alternative Beta
 Alternative Indexing
 Strategic Beta
Formulaic based
on predetermined
rules
Not market-cap
weighted
Can track a variety
of factors
1 Source: “The Strategic Factor of Smart Beta” Morningstar Magazine, April/May 2014
Beta is a measure of risk representing how a security is expected to respond to general market movements. Smart Beta
represents an alternative and selection index based methodology that seeks to outperform a benchmark or reduce
portfolio risk, or both. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk.
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Origins of Indexing
 The Dow Jones Industrial AverageSM
was created in 18961
-
“Microcosm of the U.S. stock market”
Intended to serve as a mathematical construct
 The first index fund launched in 19762
Vanguard S&P 500 Index Fund
 The first ETF launched in 19933
SPDR S&P 500 ETF
Information shown is for educational purposes and should not be deemed as a recommendation to buy or sell a specific
product.
1 S&P Dow Jones Indices, djindexes.com 2)Vanguard, vanguard.com 3) State Street Global Advisors, spdrs.com
An investor cannot invest directly in an index.
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Growth of Index-Based Investing
 $1.8 trillion in index-based mutual funds today1
 Next phase: ETFs currently represent $1.7 trillion in
index-based investments2
First PriceWeighted Index3
1890s
1900s
First Smart Beta
ETF (2003)4
First Cap-Weighted
Index (1923)3
1910s
1920s
1930s
1940s
1950s
1960s
1970s
1980s
First Index Mutual
Fund (1976)5
1990s
First ETF
(1993)6
1) Source: “The New Indexing,” Barron’s, April 5, 2014 most recent data available 2) Bloomberg, L.P. as of Aug. 30,
2014 the most recent data available. 3) S&P Dow Jones Indices, djindexes.com 4) Guggenheim , Guggenheim.com
5)Vanguard, vanguard.com 6) State Street Global Advisors, spdrs.com. An investor cannot invest directly in an index.
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2000s
2010s
Focused on Meeting Client Investment
Objectives
Employing Features of
Both Worlds:
 May outperform a
benchmark*
 Replicates an index with
rules-based methodology
Passive
cap-weighted
Smart Beta
Active
 Provides broad market
exposure
 Ability to potentially
reduce risk through
diversification beyond a
single security
 Liquidity1
 Lower costs2
 Transparency3
Beta: is a measure of risk representing how a security is expected to respond to general market movements.
Smart Beta: an alternative and selection index based methodology that may outperform a benchmark or mitigate
portfolio risk, or both. *Smart beta funds may underperform cap-weighted benchmarks and increase
portfolio risk. There is no assurance that an investment strategy will outperform or achieve its investment
objectives.
Liquidity: Shares are not individually redeemable and owners of the shares may acquire those shares from the Fund
and tender those shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 50,000,
75,000, 100,000 or 200,000 shares. 2Low Cost: Since ordinary brokerage commissions apply for each buy and sell
transaction, frequent activity may increase the cost of ETFs. 3Transparency: ETFs disclose their holdings daily.
1
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Enhanced Beta Led by High-Conviction Management Firm
Traditional Beta
Active Risk
Classic
Beta
(S&P 500)
Style Beta
(Russell 2000
S&P 500
Value)
Smart Beta
Access
(Commodity,
Alternatives)
For illustrative purposes only.
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Single Factor
Multi-Factor
or
(Low
Alternatively
WeightHigh
Volatility
(Fundamental)
Beta)
Alpha
(Active
Management)
Active Returns
Systematic Risk
12
Multi-Factor or
Single
Factor
Alternatively
(Low Weight
Volatility,
High Beta)
(Fundamental)
Active
Global Financial Crisis Created the Need
for a Evolved Investment Vehicle
The Global Financial
Crises Created:
Coming out of 2008, many of
our clients have placed a
renewed emphasis on:
 Extreme market uncertainty
 Record-high volatility
 Tactical asset allocation
(vs. buy & hold strategic
asset allocation)
 Sharp portfolio drawdowns
 Intraday liquidity1
 Steep capital gain tax
consequences
 Daily transparency2
 Cost3
 Tax efficiency4
Liquidity: Shares are not individually redeemable and owners of the shares may acquire those shares from the Fund and tender
those shares for redemption to the Fund in Creation Unit aggregations only, typically consisting of 50,000, 75,000, 100,000 or
200,000 shares. 2 Transparency: ETFs disclose their holdings daily. 3 Cost: Since ordinary brokerage commissions apply for each
buy and sell transaction, frequent activity may increase the cost of ETFs. 4 Tax Efficiency is a measure of performance for an
investment or a fund that is calculated by dividing the after-tax return by the pre-tax return. Invesco PowerShares does not offer
tax advice. Please consult your own tax advisor for information regarding your own tax situation.
1
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Global Financial Crisis Created the Need
for a Evolved Investment Vehicle
 Investor concerns heightened over both active management and
traditional passive exposure.
Active Management
Market Cap Indexes
 Frustrated with costs
 Concentrated in
overvalued stocks
 Disappointed in
performance
 Underweighted in
undervalued stocks
 Jilted by lack of
downside protection
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 Overexposed to the most
indebted companies
Smart Beta Fastest-Growing ETF Segment
Nonmarket-cap-weighted ETFs captured over 29% of the U.S. ETF equity
inflows in 2013, despite representing only 19% of the assets.1
2013 ETF Industry AUM
2013 ETF Industry Flows
19%
29%
81%
71%
“Towers Watson* clients
already have $20 billion
of assets invested in
smart beta strategies.”
*Towers Watson is a global consulting
firm. Clients referenced are institutional
clients. 2
“ ‘There is a good
chance 30% of equity
allocations will end up in
smart beta products.’”
The article underscores that an
understanding of the diversity across
smart beta funds is essential, and if
‘strategies fail to deliver in the long term,
investors will withdraw.’”3
v Non-Market Cap v Market Cap
1 Source: Bloomberg L.P. as of Dec. 31, 2013. Most recent annual data available.
2 Total smart beta exposure for Towers Watson clients in 2012. Towers Watson, “Understanding smart beta,” July 2013
3 Source: Financial Times, “Smart beta funds eye $5tn windfall”, July 14, 2013
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Cap Weighting: Unintended Biases Exist
Did U.S. equity investors intend to increase their exposure
to Technology by 70% during the tech bubble?
Tech Exposure Grew from 19% to 33% in Just One Year
% Technology in S&P 500
35%
% Technology
in S&P 500
30%
25%
20%
15%
10%
5%
0%
3/1/99
9/1/99
3/1/00
9/1/00
3/1/01
An investor cannot invest directly in an index. Past performance is not indicative of future results.
ETFs, in and of themselves, do not qualify as diversified investment strategies. Diversification does not ensure a profit or
protect against loss.
Source: Bloomberg L.P., FactSet as of June 30, 2014
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Headlines Reflect Shift to Smart Beta
“The New, Improved ETFs: How Smart is Smart Beta?”
Cover Story: Barron’s, May 10, 2014
“All Hail the New King: The Rise of ‘Smart’ Index Funds”
Cover Story: Barron’s, April 5, 2014
“The Strategic Factor of Smart Beta”
Cover Story: Morningstar Magazine, April/May 2014
“Index Funds that Just Might Beat the Market: Investors Have
Put Billions into ‘Smart Beta’ Funds over the Past Year”
The Wall Street Journal, Nov. 8, 2013
Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk.
There is no assurance that an investment strategy will outperform or achieve its investment objectives.
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Outlook for Institutional Use
A majority of Institutional Decision Makers (IDMs) plan to increase use of
ETFs and smart beta ETFs stand to grow at the highest rate.
Expected Change in ETF Usage in 12 Months
v
v
v
2%
Increase
Expected Change in the Next 3 Years
v Increase v Remain the Same v Decrease
Remain the Same
Smart Beta ETFs
Decrease
Market-Cap
Weighted ETFs
40%
58%
Actively
Managed ETFs
Leveraged/Inver
se ETFs
53%
48%
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38%
42%
13%
Source: Cogent Research, ETF Thought Leadership: Identifying ETF Investment Strategies & Needs Among
Institutional Investors As of October 11, 2013. See slide 46 for important information for Cogent Study.
19
46%
1%
14%
55%
77%
4%
10%
Institutions Plan to Increase Use of Smart Beta ETFs
v
v
v
v
v
Extremely likely
6%
7%
9%
Very likely
Somewhat likely
38%
67%
High Dividend
29%
44%
Not very likely
Not at all likely
44%
Low Volatility
46%
Fundamental
Weight
34%
27%
Equal Weight
46%
38%
19%
High Beta
10%
Total
Institutional
Decision
Makers
15%
Institutional
Investors
< $500M
Assets
9%
Other
5%
Institutional
Investors
> $500M
Assets
Source: Cogent Research, ETF Thought Leadership: Identifying ETF Investment Strategies & Needs Among
Institutional Investors As of October 11, 2013. See slide 46 for important information for Cogent Study.
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Institutions Reasons for Using Smart Beta ETFs
Primary Reasons for Using / Not Using Rules-Based/Smart Beta ETFs (Unaided)
Reasons For Using
Reasons For Not Using*
Lack of familiarity
31%
Outperforms Benchmark indexes
Diversification
Reduce volatility/beta
Alternative weighting of assets
Better asset risk return
Alternative strategy
Exposure to specific assets
Low cost
Other
Lack of history/track record
12%
No need
11%
Not part of our investment
strategy
10%
Prefer active management
9%
18%
18%
18%
vs.
13%
11%
7%
2%
9%
Not cost efficient
6%
Don’t work consistently in
different market conditions
5%
Difficult for clients to
understand
4%
Considering it
4%
Don’t think they work
4%
Low volume/small funds
4%
There is no assurance that an investment strategy will outperform or achieve its investment objectives.
Source: Cogent Research, ETF Thought Leadership: Identifying ETF Investment Strategies & Needs
Among Institutional Investors As of October 11, 2013. See slide 46 for important information for Cogent Study.
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34%
Only 4%
believe
this
Portfolio Implementation
Express Market Views, Fine Tune Exposures, or
Diversify through Core and Satellite Positions
1
Access
2
Single Factor
Strategies
3
Multi-Factor or
Alternatively
Weighted
Strategies

Commodities

Low Volatility

Fundamentals Weighted

Multi-Strategy
Alternatives

Dividend

Equal Weighted
Equity Hedge/Tail Risk

High Quality

Quantitative Strategies

Buyback


Other Alternatives


Momentum
Alternatively Weighted
Fixed Income

High Beta
Commodities and futures generally are volatile and are not suitable for all investors.
For more specific definitions of these factors, please see the Glossary and Terms section at the end of this presentation.
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Index Proxies and Definitions for Information on
Slides 22 and 23
Low Volatility is represented by S&P 500 Low Volatility Index which
was incepted on Apr. 4, 2011. The S&P 500® Low Volatility Index is
compiled, maintained and calculated by Standard & Poor's and consists
of the 100 stocks from the S&P 500® Index with the lowest realized
volatility over the past 12 months.
Fundamental is represented by FTSE RAFI US 1000 Index which was
incepted on Nov. 28, 2005. FTSE RAFI US 1000 Index: is designed
to track the performance of the largest US equities, selected based on
the following four fundamental measures of firm size: book value, cash
flow, sales and dividends. The 1,000 equities with the highest
fundamental strength are weighted by their fundamental scores. An
investment cannot be made directly into an index.
Dividend Growers is represented by NASDAQ US Broad Dividend
Achievers Index which was incepted on Dec. 9, 2003. The NASDAQ
US Broad Dividend AchieversTM Index is designed to identify a
diversified group of dividend-paying companies.
Momentum is represented by Dorsey Wright Technical Leaders Index
which was incepted on Jan. 9, 2007. The Dorsey Wright Technical
Leaders Index includes approximately 100 US companies from a
broad mid- and large-capitalization universe. The Index is constructed
pursuant to Dorsey, Wright & Associates, LLC's proprietary
methodology, which takes into account, among other factors, the
performance of each of the approximately 1,000 largest companies in
the eligible universe as compared to a benchmark index, and the
relative performance of industry sectors and sub-sectors.
Buyback is represented by NASDAQ Buyback Achievers Index which
was incepted on Nov. 9, 2006. The NASDAQ US BuyBack Achievers
Index is comprised of US securities issued by corporations that have
effected a net reduction in shares outstanding of 5% or more in the
trailing 12 months.
High Quality is represented by S&P 500 High Quality Rankings Index
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which was incepted on June 20, 2010. The S&P 500 High Quality
Rankings Index is designed to provide exposure to the constituents
of the S&P 500 Index that are identified as stocks reflecting long-term
growth and stability of a company's earnings and dividends.
High Beta is represented by S&P 500 High Beta Index which was
incepted on May 4, 2011. The S&P 500 High Beta Index is compiled,
maintained and calculated by Standard & Poor's and consists of the
100 stocks from the S&P 500® Index with the highest sensitivity to
market movements, or beta, over the past 12 months.
High Dividend is represented by S&P High Yield Dividend Aristocrats
from its inception on Nov. 9, 2005 through Sept. 17, 2012 after which
it is represented by S&P 500 High Dividend Index. The S&P High
Yield Dividend Aristocrats Index is comprised of the 50 highest
dividend yielding constituents of the stocks of the S&P Composite 1500
Index that have increased dividends every year for at least 25
consecutive years. The S&P 500 High Dividend Index is composed
of 50 securities traded on the S&P 500 Index that historically have
provided high dividend yields and low volatility.
Value is represented by Dynamic Large Cap Value Intellidex Index
which was incepted on Dec. 9, 2003. Dynamic Large Cap Value
Intellidex Index is designed to provide capital appreciation while
maintaining consistent stylistically accurate exposure. The Style
Intellidexes apply a rigorous 10 factor style isolation process to
objectively segregate companies into their appropriate investment
style and size universe.
Small Cap is represented by FTSE RAFI US 1500 Small-Mid Index
which was incepted on May 4, 2006. FTSE RAFI US 1500 Small-Mid
Index is designed to track the performance of small- and midcapitalization equities of companies domiciled in the US.
Historically Shown to Capture Risk Premia
Smart Beta Excess Return Since Inception of Respective Index Launch
Median
0.7 %
Annualized Excess Return
Value
3.6%
Small Cap
1.2%
Momentum
0.6%
Low Volatility
0.3%
High Quality
0.9%
High Dividend
High Beta
-0.3%
-4.7%
Fundamental
1.6%
Dividend Growers
-1.1%
Buyback
-6.0%
3.1%
-5.0%
-4.0%
-3.0%
-2.0%
-1.0%
0.0%
1.0%
2.0%
3.0%
4.0%
Annualized Excess Return (Relative to S&P 500)
Source: Bloomberg L.P., since index inception shown as of September 30, 2014, the most recent data available. An investment cannot be made directly into
an index. Index returns do not reflect any fees, expenses or sales charges. Nor do they represent fund performance. Please see the prior slide for index
proxies and definitions. Please see slide 42 for index performance since inception.
Past performance does not guarantee future results. Smart beta strategies may underperform cap-weighted benchmarks and increase
portfolio risk. There is no assurance that an investment strategy will outperform or achieve its investment objectives.
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Factor Leadership Can Change Rapidly
Q1 2012
Q2 2012
Q3 2012
Q4 2012
Q1 2013
Q2 2013
Q3 2013
Q4 2013
Q1 2014
Q2 2014
Q3 2014
High Beta
17.1%
Low Volatility
3.7%
High Beta
8.7%
High Beta
6.2%
Buyback
14.6%
Buyback
4.9%
Buyback
10.2%
High Beta
13.7%
High Dividend
4.9%
High Dividend
7.8%
S&P 500
1.1%
Momentum
14.2%
Dividend
Growers
0.2%
Fundamental
6.4%
Small Cap
3.6%
High Dividend
13.4%
Small Cap
4.9%
Small Cap
10.2%
Buyback
10.7%
Low Volatility
3.3%
High Beta
7.2%
High Quality
1.1%
Small Cap
13.8%
Value
0.0%
Value
6.4%
Fundamental
2.2%
Value
13.2%
High Beta
4.2%
High Beta
8.9%
Fundamental
10.5%
Value
3.0%
Dividend
Growers
5.4%
Value
1.0%
S&P 500
12.6%
High Dividend
-0.9%
S&P 500
6.4%
Momentum
1.6%
Low Volatility
13.2%
Value
3.7%
Momentum
8.3%
Value
10.5%
Fundamental
2.5%
S&P 500
5.2%
Momentum
0.9%
Fundamental
11.4%
High Quality
-1.6%
Dividend
Growers
5.7%
High Quality
1.3%
Fundamental
12.8%
Fundamental
3.5%
High Quality
5.6%
S&P 500
10.5%
High Beta
2.2%
Low Volatility
5.2%
Buyback
0.3%
Buyback
11.0%
Buyback
-2.6%
Small Cap
5.6%
Value
1.0%
Small Cap
12.1%
High Quality
3.0%
S&P 500
5.2%
Small Cap
9.8%
High Quality
1.8%
Fundamental
5.0%
Fundamental
-0.1%
High Quality
10.1%
S&P 500
-2.8%
Buyback
5.6%
Buyback
0.3%
Dividend
Growers
11.7%
S&P 500
2.9%
Fundamental
5.2%
High Quality
9.4%
S&P 500
1.8%
Value
4.9%
Dividend
Growers
-0.3%
Value
8.8%
Momentum
-3.2%
High Dividend
5.2%
S&P 500
-0.4%
High Quality
11.3%
Momentum
1.2%
Dividend
Growers
3.6%
Momentum
8.4%
Small Cap
1.6%
Momentum
4.7%
High Beta
-0.3%
Dividend
Growers
6.4%
Fundamental
-3.2%
High Quality
4.9%
Low Volatility
-0.9%
Momentum
10.7%
High Dividend
1.1%
Value
3.0%
Dividend
Growers
8.1%
Momentum
1.6%
High Quality
4.1%
Low Volatility
-1.0%
High Dividend
6.0%
Small Cap
-4.9%
Momentum
4.3%
Dividend
Growers
-1.1%
S&P 500
10.6%
Dividend
Growers
1.0%
Low Volatility
1.2%
Low Volatility
7.0%
Dividend
Growers
1.4%
Buyback
3.5%
High Dividend
-1.3%
Low Volatility
4.3%
High Beta
-12.6%
Low Volatility
3.0%
High Dividend
-1.6%
High Beta
9.5%
Low Volatility
0.9%
High Dividend
0.5%
High Dividend
5.2%
Buyback
1.4%
Small Cap
2.2%
Small Cap
-6.5%
3.6%
5.7%
7.7%
Difference Between Top- and Bottom-Performing Market Segments
12.9%
16.3%
5.8%
7.8%
5.1%
4.0%
9.7%
8.5%
Source: Bloomberg L.P., as of September 30, 2014 the most recent data available. An investment cannot be made directly into an index. Index returns do not reflect
any fees, expenses or sales charges. Nor do they represent fund performance. Please see slide 21 for index proxies an d definitions. Please see slide 42 for
standardized performance. Past performance does not guarantee future results. Smart beta strategies may underperform cap-weighted benchmarks
and increase portfolio risk. There is no assurance that an investment strategy will outperform or achieve its investment objectives.
This does not constitute a recommendation of the suitability of any investment strategy for a particular investor. Investors should
consult their Financial Advisors before making any investment decisions. Diversification does not ensure a profit or eliminate the risk
of loss.
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Core-Satellite Investing
 Build a diversified core with
single factor or multifactor/alternatively weighted
strategies
Opportunistic
Aggressive
 Tactically adjust market
exposure based on market
outlook with the objective
of achieving portfolio
out-performance
Cautious
Defensive
Core-Satellite investing is a method of portfolio construction designed to balance expected risk and return in a portfolio by combining “core” strategies that
seek to minimize portfolio volatility and costs with “satellite” strategies that seek to enhance portfolio returns compared to a benchmark. Satellite portfolio
allocations generally fall into four strategies that seek to: resist general fluctuations in the market (defensive); dampen risks that may cause portfolio losses
(cautious); selectively participate in market fluctuations that may enhance portfolio returns (opportunistic); fully participate in upward market swings that
may enhance portfolio returns (aggressive).
This should not be construed as investment advice nor as a recommendation of a particular strategy or product. Consult with your financial advisor before
making any investment decisions. There is no assurance that an investment strategy will outperform or achieve its investment objectives.
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Managing Volatility with Factor Driven Indexes
Low-Volatility Strategies
 Single Factor Low Volatility
 Optimized Minimum-Variance
 Equity Income
 Fixed Income
There is no assurance that such strategies will provide low volatility.
29
P-SPLV-PPT-1I 10.13
Managing Volatility with Factor Driven Indexes
Seeking a Better Core: Accessing Low Volatility
PowerShares S&P 500 Low-Volatility Portfolio
Key features:
Focused on the Least Volatile
 Simple, transparent index methodology
 Potential downside protection with upside participation1
S&P 500 Parent Index
 Unconstrained sector exposure
SPLV Performance Attributes Since Inception (as of 9/30/14):
Annualized
Return Since
Inception
(NAV 5/5/2011)
Volatility
Sharpe
Ratio
Up
Capture
Down
Capture
PowerShares
S&P 500 Low
Volatility Portfolio
13.9%
8.9%
1.55
72%
47%
S&P 500 Index
14.6%
11.9%
1.23
-
-
Least Volatile
20% of Stocks
Inverse
Volatility
Weighted*
S&P 500 Low
Volatility
Index
Past performance does not guarantee future results.
*Least volatile stocks receive the highest weight.
1 References to downside protection should not be construed as elimination of capital loss but rather as mitigation of capital
loss versus a particular asset class or the market in general.
Sources: Invesco PowerShares and Bloomberg L.P., May 5, 2011-Sept. 30, 2014, calculated monthly. Index returns do not
represent fund returns. An investor cannot invest directly in an index. Please see important definitions, standardized
performance and risk disclosures beginning at slide 40.
30
P-SBTD-PPT-1P 10.14 x01.15
Managing Volatility
Using Factor-Driven Indexes
Mobility to Rotate In and Out of Sectors
Source: Invesco PowerShares and FactSet Research Systems, Inc. as of June 30, 2014. For Illustrative purposes only.
Investors cannot invest directly in a basket of the 100 least volatile companies in the S&P 500 Index.
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P-SPLV-PPT-1I 10.13
Why a Multi-Factor Approach?
Any single metric index works, but has a structural bias:
– Sales—Overexposed to large companies with thin margins
– Cash flow—Overexposed to cyclical stocks at cyclical peaks
– Dividends—Overexposed to mature, high-yield companies, and exclusion of
growth companies
– Book Value—Overexposed to companies with aggressive accounting
Composite approach seeks to improve methodology
– Seeks to diversify exposure to data source, sectors, and other risks
– Seeks to improve robustness of methodology
– Potential for positive risk-return performance
Please see important definitions, standardized performance, risk disclosures, etc. beginning at slide 40.
Source: Research Affiliates, LLC
33
P-RAFI-PPT-1I 02.14
The Collapse and Rebound of Financial Stocks
 RAFI Strategies provided an anchor from which to contra-trade1
in the last credit crisis
– Contra-trading also prevented “abandoning the losers2” during the credit crisis
1 The annual reconstitution back to a company’s fundamental scale as defined by a composite of sales, cash flow, book value, and
dividends. This reconstitution forces the portfolio to trim stocks whose prices have recently outperformed their fundamentals and
add to those stocks that have recently under performed their business’ economic footprint.
2 Securities that experienced a substantial loss in value.
Source: Research Affiliates, LLC. Data 09/30/2008 through 09/30/2009.
34
P-RAFI-PPT-1I 02.14
PRF has a gross expense ratio of 0.41%. However, the Adviser has contractually agreed to waive fees and/or pay certain Fund expenses which
resulted in the total net operating expense of 0.39%. These waivers and reimbursement contracts extend through at least
Aug. 31, 2015.
©2014 Morningstar, Inc. All rights reserved. The information contained herein is proprietary to Morningstar and/or its content providers. It may
not be copied or distributed and is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are
responsible for any damages or losses arising from any use of this information. Morningstar ratings are based on a risk-adjusted return measure
that accounts for variation in a fund’s monthly performance, placing more emphasis on the downward variations and rewarding consistent
performance. The overall rating is derived from a weighted average of three-, five and 10-year rating metrics, as applicable. The overall rating is
derived from a weighted average of three-, five- and 10-year rating metrics, as applicable. Ratings are as of the most recent quarter end and are
subject to change every month. A fund is eligible for a Morningstar rating three years after inception. The top 10% of funds in a category receive
five stars, the next 22.5% four stars, the next 35% three stars, the next 22.5% two stars and the bottom 10% one star. PowerShares FTSE
RAFI US 1000 Portfolio was rated against the following numbers of US-domiciled US ETF Large Value funds over the following time periods: 34
funds in the last three years and 28 funds in the last five years. With respect to these US ETF Large Value funds, PowerShares FTSE RAFI US
1000 Portfolio received a Morningstar Rating of four stars for both the three- and five-year periods, respectively as of September 30, 2014.
35
P-SBTD-PPT-1P 10.14 x01.15
Seeking a Better Core: Expect More from Your Beta
PowerShares FTSE RAFI US 1000 Portfolio
Key features:
Lower Expenses & No Cap Gains
 Mitigates potential shortcomings with
traditional indexes
 Rapid adoption by institutional investors
 Potential Excess Returns through a
Disciplined Rebalancing Process
13th Percentile
Since Inception Dec. 19, 2005
2.50%
1.95%
2.00%
1.50%
1.04%
1.00%
(20 of 165) Lipper Peer Group Ranking
Since Inception
Multi-Cap Value as of Sept. 30, 2014. The Lipper one-year rank
is 15% (40 of 273) and the five-year rank is 30% (66 of 220).
0.50%
0.39%
0%
0.00%
Net Expense
Ratio
Overall Morningstar Rating
Category
Average*
Capital Gains
Distribution
Category
Average*
ETF Large Value (34 Funds) as of Sept. 30, 2014
Past performance does not guarantee future results. Morningstar rankings are based on total return, excluding sales charges and including fees
and expenses, versus all funds in the category tracked by Morningstar. Since Inception Lipper Rank begins the month-end date of the ETF’s inception
month. Lipper fund percentile rankings are based on total returns, excluding sales charges and including fees and expenses, and are versus mutual funds,
ETFs and funds of funds in the category tracked by Lipper.
*Lipper Multi-Cap Value Classification Median expense ratio and Capital Gains are based on open-end, no- load mutual funds and ETFs; excludes funds of funds.
While it is not Invesco PowerShares intention, there is no guarantee that the Funds will not distribute capital gains to its shareholders.
Please see important definitions, standardized performance and risk disclosures beginning at slide 40.
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P-SBTD-PPT-1P 10.14 x01.15
“PowerShares’ brand is really about …
providing investors more intelligent
exposure to the markets, rather than just
strictly cap-weighted beta.”
--Interview with IndexUniverse.com, “Straight From the Source: Bruce Bond”, Dec. 14, 2007
H. Bruce Bond, Founder & Former President and CEO, PowerShares Capital Management
Invesco PowerShares introduced many of the first non-cap-weighted
exchange-traded funds available today, calling them “Intelligent ETFs+”.
+ When we say that our ETFs are intelligent, we mean that in several different ways. Please see “Important
Information” on slide 40for a more detailed explanation.
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P-SBTD-PPT-1P 10.14 x01.15
High-Conviction Smart Beta Management Firm
with a Track Record of Meeting Client Needs
Invesco PowerShares has the largest and broadest set of Smart Beta ETFs with
the longest track record.
# > 5 Years
 PowerShares: 61
 Provider with 2nd Largest
Offerings: 32
Source: Invesco PowerShares as of Sept. 30, 2014. The smart beta category includes ETFs that have an alternative and selection index
based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both. Smart beta funds may underperform capweighted benchmarks and increase portfolio risk. Industry remainder represents all ETF products that meet this criteria, excluding
PowerShares smart beta products. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk.
Beta is a measure of risk representing how a security is expected to respond to general market movements.
39
P-SBTD-PPT-1P 10.14 x01.15
Smart Beta Key Takeaways
 Represents alternative weighting or selection index-based
methodology that may outperform a benchmark and/or
mitigate portfolio risk
 Research shows that explosive growth will likely continue to
accelerate1
 Access to investment factors often relied on active
managers for excess return and/or risk reduction
 Adds value in the construction of strategic core allocations
and tactical strategy implementation
 Transcends active—passive paradigm, representing a
significant expansion of the Advisor tool kit
1 Based on data presented in slides 16, 17, 18.
Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. There is no
assurance that an investment strategy will outperform or achieve its investment objectives.
40
P-SBTD-PPT-1P 10.14 x01.15
For Additional Smart Beta Resources
Visit: pwr.sh/smart-beta
41
P-SBTD-PPT-1P 10.14 x01.15
Q & A/Discussion
Glossary & Terms
Alternatively Weighted Fixed Income: Assigns issuer weights based upon
alternative weighting methodologies including equal, fundamental or other nonmarket capitalization weighting approaches.
Alpha: a measure of performance relative to the market. An alpha of 1.0%
means the fund outperformed the market 1.0%. A positive alpha is the extra
return awarded to the investor for taking additional risk rather than by
accepting the market return.
Basis Point: A basis point is the movement of interest rates or yields expressed
in hundredths of a point.
a benchmark.
Expense Ratio: the total annual fees and expenses charged by a fund divided
by average daily net assets. ETFs and index mutual funds tend to have lower
expense ratios than most actively managed mutual funds because they do not
have active management.
Equity Hedge/Tail Risk: A form of portfolio risk that arises when the
possibility that an investment will move greater than what is shown by a normal
distribution.
Beta/Traditional: is a measure of risk representing how a security is expected
to respond to general market movements.
Equal Weighted: Assigns issuers in equivalent amounts.
High Beta: Utilizes a beta-weighted methodology to increase exposure to
market movements of a benchmark without incorporating leverage.
book value, cash flow, sales and dividends, within an index in attempt to
achieve mutually exclusive security selection.
Book Value: represents a company’s total assets minus intangibles and
liabilities.
Fundamentals Weighted: Ranks all publicly listed US companies according to
four fundamental measures of company size: sales, cash flow, book value and
dividends.
Buyback: Tracks US companies that consistently repurchase their own
outstanding shares used by institutions and active managers for decades.
Cash Flow(s): is/are a revenue or expense stream that changes a cash
account over a given period.
Correlation: indicates the degree to which two investments have historically
moved in the same direction and magnitude.
Dividends/High Dividend: shows how much a company pays out each year
to shareholders relative to its share price. Companies characterized as high
dividend tend to issue higher annual payouts.
Dividend Growers: Ranks securities by their dividend yield while seeking to
increase overall portfolio yield and potential for improved price performance.
Dividend Yield: the yearly dividend per share divided by the market price at
the time of purchase. It is the ratio that shows how much a company pays out
in dividends each year relative to its share price.
Down/Up Capture: Down capture measures how severely periods of negative
benchmark returns affect a manager. Up capture measures how greatly periods
of positive benchmark returns affect a manager.
Drawdowns: refers to the period of decline for an investment and usually
quoted as a percentage between the highest net asset value to the lowest.
Earnings Momentum: is a measure of the acceleration of the amount of
earnings that a company produces during a specific period, which is usually
defined as a quarter or a year.
Excess Return: the rate of return that an investor can expect to receive on a
security in excess of the risk-free rate for taking on additional risk compared to
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P-SBTD-PPT-1P 10.14 x01.15
Factor Driven: A method of using objective style determinates, such as
Futures Market: an exchange where futures contracts and options on futures
contracts are traded. This may include commodities, financial derivatives or a
combination of these, as well as futures and options on indexes and equity
products.
Liquidity: is characterized by a high level of trading activity and is a measure
of the degree to which an asset or stock can be bought or sold in the market
without affecting it’s asset price. Assets or stocks that can be easily bought or
sold are known as liquid assets.
Low Cost: since ordinary brokerage commissions apply for each buy and sell
transaction, frequent activity may increase the cost of ETFs.
Low Volatility: Utilize volatility rankings while seeking to minimize the effects
of market fluctuations.
Market-Cap-Weighted: a type of index in which individual components are
weighted according to market capitalization. Index value can be calculated by
adding the market capitalizations of each index component and dividing that
sum by the number of securities in the index.
Median: The middle number in a sorted list of numbers.
Momentum: Ranks securities relative to peers, utilizing relative strength
methodology to identify the strongest and weakest investment trends.
Multi Strategy Alternatives: Seek positive lo correlations returns compared to
the broader market through investments in a combination of strategies, that
could include a combination of securities.
Glossary & Terms
Net Asset Value (NAV): the total value of a fund’s portfolio holdings per share
or unit. Most mutual funds calculate their NAVs once per day, after the market
close. Many ETFs calculate an indication of their NAVs throughout the trading
day, in addition to calculating their NAVs once per day, after the market close.
Non-Cap Weighted: assign weights to stocks based on factors other than
market capitalization in an attempt to reduce the risk of overexposure to a
certain sector or group of stocks.
Non-Price Weighted: assign weights to stocks based on factors other than
price in an attempt to identify fair value of each company and avoid
overweighting overvalued stocks.
Price Momentum/Momentum: is a measure of the acceleration of a stock’s
price during a specific period, which is usually defined as a quarter or a year.
Market-Cap-Weighted: A type of index in which individual components are
weighted according to market capitalization. Index value can be calculated by
adding the market capitalizations of each index component and dividing that
sum by the number of securities in the index.
Quality/High Quality: a ranking that reflects the long-term growth and
stability of a company’s earnings and dividends. Focuses on companies that
have a Standard and Poor’s quality ranking of A-* or above which
have historically exhibited higher sharpe ratios and lower volatility.
Quantitative Weighted: a type of rules-based index in which individual
components are weighted according to a variety of factors, such as volatility and
momentum, in an attempt to generate excess return.
Risk Premiums/Premias: the rate of return that an investor can expect to
receive on a security in excess of the risk-free rate for taking on additional risk.
Roll Return: roll return is the return, positive or negative, generated by rolling
from a short-term futures contract to a longer term futures contract.
Sales: is a measure of revenue that a company produces during a specific
period of time, which is usually defined as a quarter or a year.
Size: refers to a factor to used to determine the value of a stock.
Small Cap: refers to stocks with relatively small market capitalization.
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P-SBTD-PPT-1P 10.14 x01.15
Smart Beta: an alternative and selection index based methodology that may
outperform a benchmark or reduce portfolio risk, or both. Smart beta funds
may underperform cap-weighted benchmarks and increase portfolio risk.
Sharpe Ratio: is a risk-adjusted measure calculated using standard deviation
and excess return to determine reward per unit of risk. A higher Sharpe ratio
indicates better risk adjusted performance.
Standard Deviation: Standard deviation measures a fund’s range of total
returns and identifies the spread of a fund’s short-term fluctuations.
Tactical Asset Allocation: Process of dynamically adjusting market exposure
based on market outlook with the objective of achieving portfolio outperformance.
Tax Efficiency: a measure of performance for an investment or a fund that is
calculated by dividing the after-tax return (for a high-tax bracket investor) by
the pre-tax return.
Invesco PowerShares does not offer tax advice. Please consult your own tax
advisor for information regarding your own tax situation.
Transparency: ETFs disclose their holdings daily.
Value: is a measure of a stock that trades for less than its net asset value
(NAV) and is usually identified by lower-than-average price-to-book or price-toearnings ratios and/or high dividend yields.
Volatility: the annualized standard deviation of monthly index returns.
Factor Methodology
Index Live Date
Buyback
11/9/2006
Dividend Growers
12/9/2003
Fundamental
High Beta
High Dividend
High Quality
Low Volatility
Momentum
11/28/2005
4/4/2011
11/23/2004
6/20/2010
4/4/2011
1/9/2007
Since Index
Inception
10.0%
5.8%
8.2%
2.4%
6.5%
7.2%
8.2%
7.6%
Factor
Buyback
Dividend Growers
Fundamental
High Beta
High Dividend
High Quality
Low Volatility
Momentum
Source: Bloomberg L.P., as of September 30, 2014 the most recent data available. An investment cannot be made directly into an
index. Index returns do not reflect any fees, expenses or sales charges. Nor do they represent fund performance.
45
P-SBTD-PPT-1P 10.14 x01.15
PowerShares FTSE RAFI US 100 Portfolio (PRF)
as of 09/30/2014
Index History (%)
YTD
1 Year
3 Year
5 Year
10 Year
Fund Inception
Dec. 19, 2005
FTSE RAFI US 1000 Index
7.51
18.83
24.32
15.75
N/A
9.06
Russell 1000 Index
Fund History (%)
Fund NAV
After Tax Held
After Tax Sold
Fund Market Price
7.97
19.01
23.23
15.90
8.46
7.69
7.21
6.67
4.08
7.37
18.37
17.64
10.50
18.50
23.84
23.30
18.90
23.83
15.30
14.88
12.30
15.38
N/A
N/A
N/A
N/A
8.58
8.24
6.93
8.63
PowerShares S&P 500
®
as of 09/30/2014
Index History (%)
Low Volatility Portfolio (SPLV)
YTD
1 Year
3 Year
5 Year
10 Year
Fund Inception
May 5, 2011
S&P 500 Low Volatility Index
7.54
15.09
17.45
N/A
N/A
14.18
S&P 500 Index
Fund History (%)
Fund NAV
After Tax Held
After Tax Sold
Fund Market Price
8.34
19.73
22.99
15.70
8.11
14.62
7.33
6.49
4.14
7.56
14.78
13.69
8.47
15.05
17.15
16.36
13.39
17.14
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
13.87
13.14
10.83
13.92
Market returns are based on the midpoint of the bid/ask spread at 4 p.m. ET and do not represent the returns
an investor would receive if shares were traded at other times. Performance data quoted represents past
performance, which is not a guarantee of future results. Investment returns and principal value will fluctuate,
and shares, when redeemed, may be worth more or less than their original cost. Current performance may be
higher or lower than performance data quoted. After-tax returns reflect the highest federal income tax rate
but exclude state and local taxes. Fund performance reflects fee waivers, absent which, performance data
quoted would have been lower. After Tax Held and After Tax Sold are based on NAV.
See invecopowershares.com to find the most recent month-end performance numbers.
46
P-SBTD-PPT-1P 10.14 x01.15
Opinions expressed are of the speaker, and are not necessarily that of Invesco
PowerShares, Invesco Distributors, Inc. or Invesco Ltd. Invesco Ltd. and its
subsidiaries offer no guarantees or warranties as to the accuracy and reliability
of opinions expressed, and cannot guarantee similar experiences.
There is no assurance that the products listed in this material will achieve their
investment objectives. Please be aware that the products listed are subject
to various risks which depending upon the product may include risks such as
value investing, sector, interest rate, fixed-income investing, commodities and
futures, and foreign and emerging markets. For further description on the
relative risks for each product please obtain the appropriate prospectus by
visiting invescopowershares.com/prospectus.
+When we say that our ETFs are intelligent, we mean that in several different
ways:
One of our largest family of ETFs is based on Intellidexes™ — dynamic indexes
that use rules-based quantitative analysis to choose stocks for their capital
appreciation potential. We believe this is an intelligent way for an index to select
stocks.
Our ETFs based on FTSE RAFI® indexes weight stocks according to fundamental
economic factors. We believe this is a more intelligent weighting method than
market-cap weighting. Furthermore, our Fundamental Index ETFs are based on
four factors — sales, cash flow, book value and dividends — which we believe is
a more balanced, intelligent approach than weighting stocks according to just
one fundamental measure.
We also have a wide range of ETFs that target narrow slices of the market
(Intelligent Access) — from niche industries to specific world regions.
For investors who are interested in these niches, we believe ETFs — which
invest in multiple companies within a market sector — may offer a more
intelligent investment approach than stock picking.
General Risk Information
There are risks involved with investing in ETFs, including possible loss of money.
Index-based ETFs are not actively managed and are subject to risks similar to
those of stocks, including those regarding short selling and margin maintenance
47
P-SBTD-PPT-1P 10.14 x01.15
requirements. Ordinary brokerage commissions apply. The Fund's return may
not match the return of the Underlying Index.
There is no assurance that the strategies or funds listed in this material will
achieve their investment objectives. Investments focused in a particular
industry are subject to greater risk, and are more greatly impacted by market
volatility, than more diversified investments.
The information in this presentation is provided for informational purposes only
and is not to be construed as investment advice or a recommendation of a
particular strategy or product. All strategies discussed must be implemented by
a financial advisor. Asset allocation/diversification do not eliminate the risk of
loss.
Important Risk Information
Low Volatility: Volatility is a statistical measurement of the magnitude of up
and down asset price fluctuations over time. There can be no guarantee the
Fund will provide low volatility.
High Dividend Risk Information: Securities that pay high dividends as a
group can fall out of favor with the market, causing such companies to
underperform companies that do not pay high dividends.
High Yield/Quality Risk Information: High-yield securities have additional
risks, including interest-rate changes, decreased market liquidity and a larger
amount of outstanding debt than investment-grade securities.
BuyBack Risk Information: BuyBack strategies are characterized by
companies that consistently repurchase their own outstanding shares of
common stock. Common stock risk is the financial risk that the value of an
individual company's stock may fall as a result of factors directly relating to that
company, such as decisions made by its management or lower demand for the
company's products or services. Common stocks may decline significantly in
price over short or extended periods of time.
Important Risk Information
relate to a specific company or its industry.
Momentum Risk Information: The momentum style of investing is subject to
the risk that the securities may be more volatile than the market as a whole, or
that the returns on securities that have previously exhibited price momentum
are less than returns on other styles of investing.
Index Information
Dow Jones Industrial Average Index is a price-weighted measure of 30 U.S.
blue-chip companies.
High Beta Risk Information: Beta investing entails investing in securities that
are more volatile based on historical market index data.
The Russell 2000® Value Index is an unmanaged index considered
representative of small-cap value stocks. The Russell 2000 ® Value Index is a
trademark/service mark of the Frank Russell Co. Russell® is a trademark of the
Frank Russell Co.
Sector & Industry Risk Information: Investments focused in a particular
industry are subject to greater risk, and are more greatly impacted by market
volatility than more diversified investments.
International Risk Information: The risks of investing in securities of foreign
issuers, including emerging market issuers, can include fluctuations in foreign
currencies, political and economic instability, and foreign taxation issues.
Fundamentals Weighted Fixed Income Risk: Fixed-income securities, such
as notes and bonds, carry interest rate and credit risk. Interest rate risk refers
to the risk that bond prices generally fall as interest rates rise and vice versa.
Credit risk is the risk of loss on an investment due to the deterioration of an
issuer’s financial health.
PowerShares FTSE RAFI US 100 Portfolio (PRF)
Investments focused in a particular industry are subject to greater risk, and are
more greatly impacted by market volatility, than more diversified investments.
Equity risk is the risk that the value of equity securities, including common
stocks, may fall due to both changes in general economic and political
conditions that impact the market as a whole, as well as factors that directly
relate to a specific company or its industry.
PowerShares S&P 500® Low Volatility Portfolio (SPLV)
The Fund is considered non-diversified and may be subject to greater risks than
a diversified fund.
Investments focused in a particular industry are subject to greater risk, and are
more greatly impacted by market volatility, than more diversified investments.
Equity risk is the risk that the value of equity securities, including common
stocks, may fall due to both changes in general economic and political
conditions that impact the market as a whole, as well as factors that directly
48
P-SBTD-PPT-1P 10.14 x01.15
The S&P 500® Index is an unmanaged index considered representative of the
U.S. stock market.
The S&P 500® Financials Index is an unmanaged index considered
representative of the financial market.
RAFI 1000 Index is designed to track the performance of the largest US
equities, selected based on the following four fundamental measures of firm
size: book value, cash flow, sales and dividends. The 1,000 equities with the
highest fundamental strength are weighted by their fundamental scores.
Trademarks & Other Information
PowerShares® is a registered trademark of Invesco PowerShares Capital
Management LLC (Invesco PowerShares). Invesco PowerShares Capital
Management LLC and Invesco Distributors, Inc. are indirect, wholly owned
subsidiaries of Invesco Ltd.
Investors should be aware of the risks associated with data sources and
quantitative processes used in our investment management process. Errors may
exist in data acquired from third party vendors, the construction of model
portfolios, and in coding related to the index and portfolio construction process.
While Research Affiliates takes steps to identify data and process errors so as to
minimize the potential impact of such errors on index and portfolio
performance, we cannot guarantee that such errors will not occur.
“Fundamental Index®” and/or “Research Affiliates Fundamental Index®” and/or
“RAFI” and/or all other RA trademarks, trade names, patented and patentpending concepts are the exclusive property of Research Affiliates, LLC.
S&P,® S&P 500®, S&P 500 Low Volatility Index®, S&P 500 High Quality®, S&P
500 High Beta Aristocrat® and S&P 500 High Beta® are registered trademarks
of Standard & Poor’s Financial Services LLC and have been licensed for use by
S&P Dow Jones Indices and sublicensed for certain purposes by Invesco
PowerShares. The Fund is not sponsored, endorsed, sold or promoted by S&P
Dow Jones Indices LLC, S&P or their respective affiliates and neither S&P Dow
Jones Indices LLC, S&P or their respective affiliates make any representation
regarding the advisability of investing in such product(s).
The NASDAQ US Broad Dividend Achievers Index is a trademark of NASDAQ
OMX Group, Inc. and is licensed for use by Invesco PowerShares Capital
Management LLC in connection with the PowerShares Dividend Achievers
Portfolio. The Fund is not sponsored or endorsed by NASDAQ OMX Group, Inc.,
and NASDAQ OMX Group, Inc. makes no warranty or representation as to the
accuracy and/or completeness of the Index or results to be obtained by any
person from use of the Index or the trading of the Product.
The Technical Leaders™ Ranking System is a trademark of Dorsey, Wright &
Associates, LLC that is licensed to Invesco PowerShares Capital Management
LLC. This product is not sponsored, recommended, sold or promoted by Dorsey,
Wright & Associates, LLC or any of its affiliates.
The NASDAQ Buyback Achievers™ Index is a trademark of NASDAQ OMX
Group, Inc. and is licensed for use by Invesco PowerShares Capital Management
LLC in connection with the PowerShares Buyback Achievers Portfolio. The Fund
is not sponsored or endorsed by NASDAQ OMX Group, Inc. and NASDAQ OMX
Group, Inc. makes no warranty or representation as to the accuracy and/or
completeness of the Index or results to be obtained by any person from use of
the Index or the trading of the ETF.
The Intellidex™ Indexes are trademarks of NYSE Euronext or its affiliates and
are licensed for use by Invesco PowerShares Capital Management LLC in
connection with the PowerShares Intellidex investment products. The products
are not sponsored or endorsed by NYSE Arca, and NYSE Arca makes no
warranty or representation as to the accuracy and/or completeness of the
Indexes or results to be obtained by any person from use of the Indexes or the
trading of the products.
"Keefe, Bruyette & Woods, Inc.", "KBW Premium Yield Equity REIT Index" and
"KBW" are trademarks of KBW and have been licensed for use by Invesco
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P-SBTD-PPT-1P 10.14 x01.15
PowerShares Capital Management LLC.
About The Cogent Study
The data contained within this analysis was collected from 193 participants
between September 5 and October 2, 2013. A 15-minute online survey was
administered by Cogent Research, a division of Market Strategies International,
to institutional decision makers, including pensions, endowments/foundations,
non-profit institutions, mutual funds, as well RIAs who manage institutional
assets. All institutions had at least $20 million in assets and allocated at least
1% of their assets to ETFs. Institutional RIAs had at least $25 million in assets
under management – a portion of which was managed on behalf of institutional
investors.
Invesco PowerShares is not affiliated with Cogent Research, a division of Market
Strategies International. Cogent Research is an independent full-service market
research and consulting firm, specializing in wealth management. Cogent
Research was hired by Invesco PowerShares to conduct the research used in the
creation of this study. Respondents were not made aware of Invesco
PowerShares’ involvement in this research initiative.
Before investing, investors should
carefully read the prospectus/summary
prospectus and carefully consider the
investment objectives, risks, charges
and expenses. For this and more
complete information about the Fund
call 800 983 0903 or visit
invescopoershares.com for the
prospectus/ summary prospectus.
NOVEMBER 12, 2014
Smart Beta Investing: How to Build a Portfolio
the "Smart" Beta Way
Up next:
What You Need to Know about The
Bond Market
TD Ameritrade, Inc., member FINRA/SIPC. TD Ameritrade is a trademark jointly owned by
TD Ameritrade IP Company, Inc. and The Toronto-Dominion Bank.
© 2014 TD Ameritrade IP Company, Inc. All rights reserved. Used with permission
Important Disclosures
NOVEMBER 12, 2014
Carefully consider the investment objectives, risks, charges and expenses before investing in an ETF (Exchange Traded Fund). A
prospectus, obtained by calling 800-669-3900, contains this and other important information about an investment company. Read carefully
before investing.
ETFs can entail risks similar to direct stock ownership, including market, sector, or industry risks. Some ETFs may involve international risk,
currency risk, commodity risk, and interest rate risk. Trading prices may not reflect the net asset value of the underlying securities.
Commission fees typically apply.
Stock investments are subject certain risks such as market risk, price volatility and liquidity risk.
Past performance of a security, strategy or index is no guarantee of future results or success.
The material, views and opinions expressed in this presentation are solely those of the presenter and may not be reflective of those held
by TD Ameritrade, Inc.
The webcast is provided for general information purposes only and should not be considered an individualized recommendation or advice.
TD Ameritrade makes no representations or warranties with respect to the accuracy or completeness of the information provided.
Examples and recommendations presented by Invesco PowerShares Capital Management LLC should not be considered a
recommendation or solicitation by TD Ameritrade to purchase or sell any specific security.
TD Ameritrade and Invesco PowerShares Capital Management LLC are separate, unaffiliated companies and not responsible for one
another’s products, services or policies.
This presentation includes a feature that allows recording of electronic (including audio) participant-shared content. By continued
participation in this session you automatically consent to such recording, and the subsequent rebroadcast of any recording.

Smart Beta Investing: How to Build a Portfolio the "Smart

Transcription

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