Invesco Expands Factor ETF Line-up with Launch of Two High Dividend Low Volatility Funds

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Dec 01, 2016, 09:00 ET

DOWNERS GROVE, Ill., Dec. 1, 2016 /PRNewswire/ -- Invesco (NYSE: IVZ), a leading global provider of exchange-traded funds (ETFs), announced today the launch of two new factor ETFs that blend together high dividend and low volatility exposures. With these two funds, PowerShares now has 76 ETFs in its, factor lineup.

Combining high dividend and low volatility factors is potentially attractive to investors in light of government stimulus across Asia, Europe and the United States pushing bond yields to historically low levels and in certain circumstances into negative territory.

Equity income focused products might be an alternative for some investors that need a higher level of income than lower yielding fixed income investments, and can take on the additional risk.

Entering the last few months of 2016 and going into 2017, several events could spur continued volatility well into 2017, including the US presidential election, rate uncertainty, and fallout from Brexit earlier this year. Given this uncertain back drop, a strategy that looks to blend high dividend payers and low volatility could benefit investors using an income buffer with added defensiveness through investing in names that have demonstrated less sensitivity to market movements.

"Blending factors can be a key to unlocking their diversification power," said Dan Draper, Global Head of PowerShares by Invesco. "Combining high dividend and low volatility factors in our two newest ETFs may also provide investors with more defensive access to equity income in the face of uncertain markets."

PowerShares S&P International Developed High Dividend Low Volatility Portfolio (BATS: IDHD)
IDHD's strategy seeks out the highest-income-producing equities in international developed markets, and then incorporates a low volatility overlay, with the goal of avoiding value traps among high dividend stocks. This systematic, factor approach allows IDHD to efficiently identify potentially more attractive valuations when selecting equities based on the combination of high dividend and low volatility.

IDHD's initial screen is the S&P EPAC Ex-Korea Low Volatility High Dividend Index methodology, which seeks to select the 300 highest dividend paying companies within the S&P Developed Ex-US BMI LargeMidCap Index, a comprehensive benchmark including stocks from developed markets excluding the United States.

The final screen in IDHD's security selection process chooses the 100 securities that have demonstrated the lowest volatility over the trailing 12 months, potentially reducing volatility associated with dividend strategies by helping avoid names that have fallen into a value trap scenario.

PowerShares S&P SmallCap High Dividend Low Volatility Portfolio (BATS: XSHD)
XSHD's strategy also seeks out the highest-income-producing equities, but instead looks at small cap companies. From there, XSHD overlays a low volatility screen to seek out more attractive valuations.

XSHD's initial screen is the S&P SmallCap 600 Low Volatility High Dividend Index, which seeks to select the highest dividend paying companies by first screening for the highest 90 dividend yielding securities in the S&P SmallCap 600 Index, which measures the small-cap segment of the U.S. equity market.

The final screen in XSHD's security selection process selects the 60 securities that have demonstrated the lowest realized volatility over the trailing twelve months, potentially reducing volatility associated with dividend strategies by helping avoid names that have fallen into a value trap scenario.

About Invesco
Invesco is an independent investment management firm dedicated to delivering an investment experience that helps people get more out of life. NYSE: IVZ; www.invesco.com.

About PowerShares by Invesco
PowerShares by Invesco is leading the Intelligent ETF Revolution^® through its family of more than 140 domestic and international PowerShares exchange-traded funds (ETFs). PowerShares ETFs seek to outperform traditional benchmark indexes while providing advisors and investors access to an innovative array of focused investment opportunities. PowerShares has US franchise assets exceeding $105 billion as of September 30, 2016. For more information, please visit us at powershares.com or follow us on Twitter @PowerShares.

Important Risk Information

Diversification does not guarantee a profit or eliminate the risk of loss.

Factor investing is investment strategy in which securities are chosen based on certain characteristics and attributes.

Fixed-income investments are subject to credit risk of the issuer and the effects of changing interest rates. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. An issuer may be unable to meet interest and/or principal payments, thereby causing its instruments to decrease in value and lowering the issuer's credit rating.

In general, equity values fluctuate, sometimes widely, in response to activities specific to the company as well as general market, economic and political conditions.

There are risks involved with investing in ETFs, including possible loss of money. Index-based ETFs are not actively managed. Actively managed ETFs do not necessarily seek to replicate the performance of a specified index. Both index-based and actively managed ETFs are subject to risks similar to stocks, including those related to short selling and margin maintenance. Ordinary brokerage commissions apply. The Fund's return may not match the return of the Index.

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.

There is no assurance that such ETFs will provide low volatility.

Investments focused in a particular industry or sector are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.

IDHD:
The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.

Financial information related to foreign securities may be less reliable. Market quotations may not be readily available for some securities, and those securities may be fair valued which may be different than if the security had been valued using market quotations. There is no assurance that the Fund could sell a security for the value established for it at any time.

Stocks of medium-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.

The Fund is non-diversified and may experience greater volatility than a more diversified investment.

XSHD:
The Fund is non-diversified and may experience greater volatility than a more diversified investment.

Stocks of small-capitalization companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale than large companies.

An investment cannot be made into an index.

Shares are not individually redeemable and owners of the Shares may acquire those Shares from the Funds and tender those shares for redemption to the Funds in Creation Unit aggregations only, typically consisting of 50,000, 75,000, 100,000 or 200,000 Shares.

PowerShares^® is a registered trademark of Invesco PowerShares Capital Management LLC, investment adviser. Invesco PowerShares Capital Management LLC (PowerShares) and Invesco Distributors, Inc., ETF distributor, are indirect, wholly owned subsidiaries of Invesco Ltd.

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 invescopowershares.com for the prospectus/summary prospectus.

SOURCE Invesco Ltd.