Invesco announced yesterday that its "PowerShares VRDO Tax-Free Weekly Portfolio (PVI) Surpasses $1 Billion in AUM." It says of the muni money fund alternative, "Launched in November of 2007, the PowerShares VRDO Tax-Free Weekly Portfolio was the first ETF to provide investors access to the variable rate demand obligation (VRDO) market. VRDOs are floating-rate municipal bonds that offer investors tax-exempt income in a short-term time frame." Today, we briefly explore this and some other entrants in the small but growing segment of "near-cash" ETFs.
Bruce Bond, president and CEO, says, "Invesco PowerShares has strived to provide investors access to markets that have traditionally been difficult to invest in, and we are very pleased with the success of PVI. The PowerShares VRDO Tax-Free Weekly Portfolio epitomizes our commitment to providing innovative investment products that feature the tax efficiency, transparency, and liquidity benefits inherent to the ETF structure."
The company says, "The PowerShares VRDO Tax-Free Weekly Portfolio is based on the Thomson Municipal Market Data VRDO Index. The Fund will normally invest at least 90% of its total assets in securities that comprise the Index. The Index is designed to track the performance of a pool of tax-exempt VRDOs issued by municipalities in the United States on which the yields generally reset on a weekly basis. For additional information on PVI please visit http://www.invescopowershares.com/vrdo/."
PowerShares PVI is one the handful of "enhanced cash" ETFs riding a second wave of interest. Alas, the first wave, led by Bear Stearns YYY ETF, suffered from extremely poor timing. (To see Crane Data's previous posts on ETFs, search for "ETF" in our search box.) In March 2007, we wrote "More Ultra-Short ETFs on the Way: SPDR Lehmans from SSGA," "Bear Stearns Files to Launch First 'Cash' ETF, Current Yield Fund," and "Body Count Rises in Enhanced Cash; Bear YYY ETF Exits Stage Left."
We said at the time, "SSgA has filed to launch two new short-term bond ETFs, SPDR Lehman 1-3 Mo T-Bill ETF and SPDR Lehman Short-Term Treasury ETF. Barclays 1-3 Lehman Treasury ETF (symbol: SHY) has been the closest thing to a 'money fund' ETF to date." Look for more on the topic in the October issue of our Money Fund Intelligence.
