ETF Insights: An Interview with Invesco PowerShares Sr. VP Ed McRedmond

Invesco PowerShares is probably best known for the PowerShares Nasdaq 100 (QQQQ), which tracks the Nasdaq index. But apart from the Qs, Invesco PowerShares has many other ETFs suited to different market conditions and investors’ needs. Ed McRedmond, Senior Vice President at Invesco PowerShares, shares with DailyMarkets some insights into a few of them.

During the election Barack Obama said renewable clean energy would be an important part of his administration’s development plans. There are several PowerShares clean energy ETFs, which do you think will benefit most from the new Obama administration?

PowerShares is the leader in the clean/green/alternative energy ETF space with seven ETFs ranging from the broad WilderHill Clean Energy ETF (PBW), which is the oldest and largest in the U.S. to those focused on more specific sectors such as Wind Energy (PWND) or Nuclear Energy (PKN). Any are potential beneficiaries of favorable developments from the new administration.

Recently China announced a $586 billion stimulus package that would be heavily focused on infrastructure development within China. Are there any PowerShares ETFs that would benefit from this economic stimulus package?

The two most likely beneficiaries would be the PowerShares Golden Dragon Halter USX China (PGJ) and the PowerShares Emerging Markets Infrastructure (PXR), which has approximately 21% allocated to China.

There are few markets that haven’t been hard hit by the economic slump and recession that we are now in, but are there any particular PowerShares ETFs that you think would benefit from the current hard times?

Typically, during a downturn, defensive sectors like consumer staples or healthcare tend to outperform on a relative basis, so PowerShares ETFs like PSL (PSL) and PRFS (PRFS) for Consumer Staples or (PTH) and (PRFH) for Healthcare might benefit. Another idea would be the PowerShares S&P 500 BuyWrite Portfolio (PBP). It is based on the CBOE S&P 500 BuyWrite Index, which measures the total rate of return of an S&P 500 covered call strategy.

In closing, what would you tell investors about investing in ETFs?

Remember that ETFs are really just a delivery vehicle for some type of investment, like mutual funds or separate accounts are delivery vehicles, but their unique structure may provide a number of benefits, such as tax-efficiency and transparency, which are very important aspects in today’s market. The other important thing to remember is that not all indexes, and therefore ETFs, are created equal. It’s important to look below the surface and understand the methodology behind the underlying index.

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Ed McRedmond is the senior vice president of Portfolio Strategies for PowerShares Capital Management LLC. At Invesco PowerShares, Mr. McRedmond works on increasing the awareness and use of PowerShares ETFs within the various distribution channels, working with ETF analysts, due diligence groups and portfolio managers that construct ETF models and portfolios, along with sales and marketing personnel.

He joined PowerShares in 2005 after 17 years at A.G. Edwards, where he was Associate Vice President and a member of the Allocation Advisors Investment Committee. While at A.G. Edwards, Mr. McRedmond also served as senior analyst covering exchange-traded funds and closed-end funds and was a key part of the team that launched and managed A.G. Edwards’ discretionary ETF model portfolios.

Mr. McRedmond was also a member of the St. Louis Financial Analysts Society. Prior to joining A.G. Edwards, Mr. McRedmond was a founding member and supervisor of Charles Schwab’s Active Trader group.

Mr. McRedmond has been quoted in numerous publications such as Barron’s, The Wall Street Journal, Business Week, Forbes, The NY Times and Kiplinger’s Personal Finance Magazine. In 2008, he received the award for Contribution to the ETF Sector at the Capital Link Closed-End Funds and Global ETF Awards Conference and was also an Honorable Mention recipient at the 2007 Capital Link Closed-End Funds and Global ETF Awards Conference for Contribution to the ETF Sector.

Mr. McRedmond is a graduate of Quincy University with a B.S. degree in Economics & Finance and was a two-time winner of the school’s annual investment challenge for the top performing student selected portfolio.