The PowerShares S&P 500 Downside Hedged Portfolio (NYSEARCA:PHDG) was launched December 6, becoming the first ETF to be both actively managed and indexed. The fund uses an absolute return strategy that seeks to achieve positive returns in rising or falling markets not directly correlated to equity or bond markets. PowerShares S&P 500 Downside Hedged Portfolio (NYSEARCA:PHDG) employs a quantitative, rules-based strategy designed to provide returns that correspond to the performance of the S&P 500 Dynamic VEQTOR Index.
The underlying index provides investors with broad equity market exposure with an implied volatility hedge by dynamically allocating between equity, volatility, and cash. The index allows investors to receive exposure to the equity and volatility of the S&P 500 Index in a dynamic framework.
Volatility exposure will be obtained through VIX futures contracts, VIX ETFs, and VIX ETNs. Creations and redemptions will be handled principally for cash, rather than in-kind exchanges, possibly making the fund less tax efficient and more prone to tracking error.
PowerShares S&P 500 Downside Hedged Portfolio (NYSEARCA:PHDG) has an expense ratio of 0.39% and 503 holdings. Current allocations provide 86.1% exposure to the S&P 500 and 13.9% to VIX futures. Additional information is located in the overview, fact sheet (pdf), and prospectus (pdf).