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FTSE Group (“FTSE”) has licensed PowerShares Capital Management LLC to launch a range of innovative Exchange Traded Funds (ETFs) on the award-winning FTSE RAFI Index Series. The license will allow PowerShares to create the world’s first fundamentally weighted sector ETFs. Combining the fundamental methodology created by Research Affiliates (RAFI), and FTSE’s world-class indexing skills, the FTSE RAFI Indexes provide a powerful new approach to measuring the performance of US domestic equities.
Analysis of the series’ performance shows that the indexes demonstrate outperformance of market cap weighted equivalents over one, three and five years. The FTSE RAFI 1500 Index (which contains mid and small cap stocks) has outperformed the Russell 2000 index by 15.5% over a three year period, while the FTSE RAFI Industrials Index has outperformed by S&P Industrials Index by 10.8% over the same period. Further analysis of all the indexes is available at www.ftse.com/rafi
The license allows PowerShares to create and list ETFs on the following ten indexes: FTSE RAFI 1500 Index; FTSE RAFI Basic Materials; FTSE RAFI Consumer Goods FTSE RAFI Consumer Services; FTSE RAFI Energy; FTSE RAFI Financials; FTSE RAFI Healthcare; FTSE RAFI Industrials; FTSE RAFI Telecoms & Technology; FTSE RAFI Utilities. The sector indexes are created from the nine high level industry groups from the widely-used classification system, the Industry Classification Benchmark (ICB).
In a joint statement, Jerry Moskowitz, President, FTSE Americas, and Rob Arnott, President, Research Affiliates said, “The FTSE RAFI Index Series is an exciting new platform which offers an alternative approach to cap-weighted indexing. We’re proud of the success of the FTSE RAFI Index Series, and are delighted that PowerShares has selected it as the basis of the first fundamental sector ETFs, to be listed on NASDAQ.”
More information, including constituents, weightings, and performance of the ten FTSE RAFI indexes above, and others in the FTSE RAFI Index Series can be accessed at www.ftse.com/rafi
About FTSE RAFI Index Series
The FTSE RAFI Index Series is an award-winning index series, which offers investors an innovative new way of measuring equity performance. By weighting constituents using fundamental factors (sales, cash flow, book value and dividends) rather than market capitalization, the FTSE RAFI Index Series can demonstrate outperformance of capitalization-weighted indexes by up to 2.0% since 1962. The index series is jointly owned by Research Affiliates LLC, and FTSE Group, the global index company. The series contains both benchmark and tradable indexes, making it suitable for plan sponsors, index trackers, as well as for use as the basis of derivatives and Exchange Traded Funds.
The FTSE RAFI Index Series, which launched in November 2005, is already the recipient of two industry awards – the William F Sharpe Indexing Achievement Award for "Most Innovative Benchmark" and the "Most Innovative ETF Index Provider” by exchangetradedfunds.com.
