PowerShares Launches Four Fundamentally Weighted Global ETFs

ETF provider PowerShares says it will launch Monday "the first wave" of PowerShares FTSE RAFI International Portfolios, which make use of fundamental weighting instead of the more traditional cap-weighting. Fundamental weighting means that component companies are weighted not by a single measure (such as market-cap or earnings), but rather by the size of four fundamentals measures: sales, cash flow, book value and dividends. The company says that fundamental weighting "avoids many of the risks associated with market-cap or single-measure weighted indexes, while simultaneously providing the opportunity for higher returns and lower risks when compared with cap-weighted benchmarks." The four indexes anticipated to launch Monday are: PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio, PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio, PowerShares FTSE RAFI Europe Portfolio and PowerShares FTSE RAFI Japan Portfolio.

Sources: Press release
Commentary: Fundamentalists at the Gates: The Trouble With Cap- Weighted Indexes • Fundamental Indexing: New Idea, or a Repackaging of Value Investing? • Fresh Attack On Fundamental Indexing
Stocks/ETFs to watch: PowerShares FTSE RAFI Developed Markets ex-U.S. Portfolio (PXF), PowerShares FTSE RAFI Asia Pacific ex-Japan Portfolio (PAF), PowerShares FTSE RAFI Europe Portfolio (PEF), PowerShares FTSE RAFI Japan Portfolio (PJO)
Related: Fact sheets: PXF Fact Sheet (pdf), PXF Fact Sheet (pdf), PEF Fact Sheet (pdf), PJO Fact Sheet (pdf). Wikipedia on fundamentally based indexes

Seeking Alpha's news briefs are combined into a pre-market summary called Wall Street Breakfast. Get Wall Street Breakfast by email -- it's free and takes only seconds to sign up.