1. PowerShares pitch deck
Presented by Patrick Stewart
January 01, 2016

2. What is smart beta? Transcending the active-passive paradigm
For illustrative purposes only.
An investor cannot invest directly in an index. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. There is no assurance that an investment strategy will outperform or achieve its investment objectives.
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3. Building bond portfolios Bond ladders stabilize returns over different interest-rate environments
The chart below illustrates the hypothetical return over a five-year period that a bond-ladder investor would receive in a base case scenario – and in an environment featuring an immediate sharp interest-rate shock.
Effect of interest-rate changes on annualized returns for a hypothetical 1–5 year laddered bond portfolio
Rates fall 1%: Following the immediate gain in prices, returns taper off as the ladder purchases lower-yielding bonds each year.
Annualized return
No change in rates
Rates rise 1%: While the pain of rising rates is felt in the first year, the portfolio benefits from higher yields when the shortest-term bucket is reinvested each year.
For illustration purposes only. Source: Invesco, Performance is hypothetical and should not be interpreted as performance of an actual portfolio. Hypothetical bond ladder is equally weighted between five maturity buckets and begins with a yield to maturity of 3.15%. All bonds in the 1-year bucket are removed at annual reconstitution and five new bonds are added. Assumes an immediate increase or decrease in interest rates at the beginning of year 1, then no change thereafter. Aggregate return refers to the sum of the annualized returns over each period. The laddering strategy does not guarantee better performance than a non-laddered strategy and cannot eliminate the risk of investment loss.
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4. High-yield bonds Risk/return over various market environments
RAFI® Bonds US High Yield 1-10 Index (1999–2014)
Tightening spread (%)
Widening spread (%)
Up market (%)
Down market (%)
Rising rate environment (%)
Falling rate environment (%)
RAFI® Bonds US High Yield 1-10 Index
Merrill Lynch US High Yield
Source: Research Affiliates, based on data from FactSet Research Systems Inc. and Ryan ALM. The RAFI® Bonds US High Yield 1-10 Index was launched on December 31, Index data shown before this creation date has been reconstructed and is calculated on a basis consistent with its current basis of calculation. The reconstructed performance is hypothetical and for illustrative purposes only. You cannot invest directly in an index. Index performance does not reflect fees and expenses that would be applicable to a fund. The hypothetical performance data for the index should not be taken as indicating that if the index had, in fact, existed during the shown time periods before its creation that the index would have achieved the hypothetical results shown as actual results might have differed. Please see the “Hypothetical data assumptions and explanations” slide for further details. Currency: USD
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5. Bond exposure in different economic cycles
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
Real return
15.31%
High yield
11.34%
Short gov’t
4.54%
10.16%
33.76%
Long corp.
14.23%
Long gov’t
18.78%
13.02%
14.63%
17.88%
14.02%
Floating rate 6.94%
4.39%
Universe
6.42%
25.87%
12.05%
18.25%
Floating rate %
16.12%
13.18%
4.87%
3.68%
6.16%
Floating rate %
10.97%
15.84%
Floating rate 6.99%
Short corp.
2.40%
6.46%
4.25%
3.15%
5.25%
13.29%
9.18%
9.67%
4.03%
1.40%
11.74%
Floating rate %
4.06%
1.72%
6.74%
6.97%
3.93%
-1.19%
Floating rate %
2.68%
3.88%
-0.18%
-7.93%
5.41%
4.31%
4.75%
3.60%
-3.20%
8.79%
2.23%
3.86%
-13.33%
Floating rate %
1.94%
Floating rate %
4.62%
3.01%
-7.01%
3.57%
0.17%
-2.83%
Floating rate %
-11.70%
1.25%
3.29%
Floating rate %
1.17%
-12.51%
2.76%
Source: Morningstar Research Inc., as at December 31, Note that all indices are run in CAD. Short-term corporate bonds are represented by the FTSE TMX Canada Short Term Corporate Bond Index. Real return bonds are represented by the FTSE TMX Canada Real Return Canada Bond Index. Long-term corporate bonds are represented by the FTSE TMX Canada Long Term Corporate Bond Index. Floating-rate loans are represented by the Credit Suisse Leveraged Loan Index. High-yield bonds are represented by the BofA Merrill Lynch US High Yield Index. Short-term government bonds are represented by the FTSE TMX Canada Short Term Government Bond Index. Long-term government bonds are represented by the FTSE TMX Canada Long Term Government Bond Index. Canadian bonds are represented by the FTSE TMX Canada Universe Bond Index.
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6. PLV provides a similar risk profile to a 50/50 balanced portfolio
PLV - PowerShares Low Volatility Portfolio ETF Hypothetical risk/return
Performance shown is hypothetical and is calculated using the methodology and assumptions described in detail on the next slide.
Risk/Return (January 2007 to September 2015)
PLV provides a similar risk profile to a 50/50 balanced portfolio
Source: Morningstar Research Inc. Analysis period: January 31, 2007 to September 30, 2015.
*PLV Index Blend has been created as a proxy for this ETF. The data shown for the PLV Index Blend is hypothetical, and is calculated using the methodology and assumptions described in detail on the next slide. Benchmark: 30% FTSE TMX Canada Short Term Bond Index/17.5% S&P/TSX Composite Index/52.5% MSCI All Country World Index 50/50 balanced portfolio: 50% FTSE TMX Canada Short Term Bond Index/12.5% S&P/TSX Composite Index/37.5% MSCI All Country World Index
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7. Important information
Commissions, management fees and expenses may all be associated with investments in exchange-traded funds (ETFs). Unless otherwise indicated, rates of return for periods greater than one year are historical annual compound total returns including changes in unit value and reinvestment of all distributions, and do not take into account any brokerage commissions or income taxes payable by any unitholder that would have reduced returns. ETFs are not guaranteed, their values change frequently and past performance may not be repeated. Please read the prospectus before investing. Copies are available from Invesco Canada Ltd. at This piece was produced by Invesco Canada Ltd. ETFs are not diversified investments. All MERs for ETFs and trust mutual funds are as at December 31, All MERs for corporate class funds is March 31, Invesco® and all associated trademarks are trademarks of Invesco Holding Company Limited, used under licence. PowerShares®, Leading the Intelligent ETF Revolution® and all associated trademarks are trademarks of Invesco PowerShares Capital Management LLC (Invesco PowerShares), used under licence. © Invesco Canada Ltd., 2016 Published January 14, 2016
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8. Thank you