Actively Managed Bond ETF: PLK

The era of actively managed ETFs has arrived with Invesco PowerShares‘ listing of 3 actively managed equity ETFs and 1 actively managed fixed-income ETF on April 11.

The actively managed bond ETF is called the PowerShares Active Low Duration Fund (NYSEArca: PLK). Low duration refers to the short term nature of the bonds held by the ETF which lowers the fund’s price sensitivity to changes in interest rates.

With an expense ratio of 0.29%, the PowerShares managers are tasked with outperforming the Lehman 1 – 3 year Treasury Index (Amex: SHZ) on a total return basis. In addition to the index, the managers will need to outperform the iShares ETF that passively tracks the same Lehman index (NSYEArca: SHY) and has an expense ratio of 0.14%.

According to the prospectus, the managers will have several tools at their disposal including the ability to invest up to 25% of assets in non-investment grade securities. The fund will disclose holdings on a daily basis and will distribute dividends monthly.

We’ll cover the actively managed equity ETFs in another posting.

For more information, see the PowerShares website and iShares website.

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