Invesco PowerShares Variable Rate Preferred Portfolio on NYSE May 1

By Toni Weeks

San Luis Obispo, Calif., April 21 - Invesco PowerShares Capital Management LLC announced that its new PowerShares Variable Rate Preferred Portfolio will trade on the New York Stock Exchange Arca beginning May 1 under the symbol "VRP."

The fund is the first exchange-traded fund that is based on a portfolio of variable-rate preferred securities and will normally invest at least 90% of its total assets in preferreds that comprised the fund's underlying index, the Wells Fargo Hybrid and Preferred Securities Floating and Variable Rate index.

According to a press release, variable-rate preferreds are typically issued at rates below fixed-rate preferreds of similar quality in exchange for the issuer bearing most of the risk for changes in interest rates. Such securities are thus priced more like short-term instruments rather than long-term ones and are generally less sensitive than fixed-rate preferreds to changes in interest rates, Invesco said.

"We believe VRP offers investors the potential for high current income and lower interest-rate sensitivity than traditional fixed-rate preferred securities," Lorraine Wang, global head of ETF products and research, said in the release. "Dividends from variable-rate preferred securities also receive preferential tax rates compared to interest income, which makes them particularly attractive for top tax-bracketed investors."

Invesco Powershares is a subsidiary of Atlanta-based Invesco Ltd., an investment management firm.

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