New ETF, the Zacks MicroCap Index.
To paraphrase, 0.6% expense fee, turnover expected to be 100% annually and this is an actively managed index.
Anticipated listing on August 18, 2005, will bring the total number of PowerShares ETFs to twenty.
PowerShares Zacks Micro Cap Portfolio (PZI) is based on the Zacks Micro Cap Index (ZAX). The Index is designed to identify a group of micro cap stocks with the greatest potential to outperform passive benchmark micro cap indices and other actively managed U.S. micro cap strategies. Due to their low correlation to large, medium and small-sized companies, micro caps may complement existing blended portfolios by improving risk adjusted performance.
The Zacks Micro Cap Index methodology evaluates 2,300 micro cap stocks to identify the micro cap companies with the greatest capital appreciation potential as determined by Zacks proprietary index methodology. Over the past five years the Zacks Micro Cap Index has delivered excess returns of 15.60% annually with greater monthly downside protection compared to the Russell Micro Cap Index.
Microcaps are publicly traded companies with capitalizations typically under $1 Billion and often under $100 Million, which surprisingly makes them too small for most analysts and investors to bother with.
The Zacks and PowerShares alliance makes sense. Powershares has pioneered ETFs based on proprietary indexes aiming to outperform passive competitors. Zacks, an independent equity analyst house, laid the groundwork in the microcap arena with its proprietary Zacks Micro Cap Index (AMEX:^ZAX), which emphasizes companies with a value bent (typically low Price/Earnings, low Price/Book Value), liquidity, and momentum.
"We both are looking to identify characteristics of stocks that lead to outperformance in the market rather than simply replicating an index," said Cohen. "It's a natural extention of our business to take the data sets and data and modeling and include it in an index."