Offerings include VRDO tracker and two index approaches to corporate bonds. Wheaton, Ill.-based asset manager PowerShares Capital Management has added three fixed-income ETFs to its product roster. The additions are a tax-free variable rate demand obligations (VRDO) portfolio, and preferred and U.S.-dollar-denominated high-yield corporate-bond portfolios.

Noting that VRDOs can provide attractive tax-exempt yields but that the typical $100,000 trading increment keeps many investors away, PowerShares CEO Bruce Bond says his firm's VRDO Tax-Free Weekly portfolio has the potential to "open this market for investors."

Trackers

Similarly, adds Bond, PowerShares' preferred and high-yield corporate-bond portfolios, "will provide investors better access to these types of fixed income-securities, with the additional benefits from the ETF format."

The new ETF portfolios will begin trading later this month under the symbols PVI for the PowerShares VRDO Tax-Free Weekly Portfolio, PGX for the PowerShares Preferred Portfolio, and PHB for the PowerShares High Yield Corporate Bond Portfolio.

The PVI is supposed to mimic the Thomson Municipal Market Data VRDO Index, which tracks the performance of a pool of short-term, tax-exempt variable rate demand obligations issued by U.S. municipalities. Rebalanced quarterly, the index excludes issues subject to alternative minimum tax (AMT).

The PGX portfolio tracks the Merrill Lynch Fixed Rate Preferred Securities Index, which represents the total return of a diversified group of high-quality preferred securities. This index is rebalanced monthly.

The PHB portfolio follows the Wachovia High Yield Bond Index, which evaluates potential returns of high-yield corporate bonds rated below investment grade by Moody's, S&P or Fitch. These bonds can be issued by U.S. or foreign private issuers and are payable in U.S. dollars. The index evaluates securities every quarter using an equal-weighting methodology, and securities must have at least five years to maturity, a minimum par value and fixed interest rate.

PoweShares' partners include the American Stock Exchange, the Bank of New York Mellon, LaBranche Structured Products, Kellogg Capital Group, Goldman Sachs and AIM Distributors. -FWR

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