PowerShares Zacks Small-Cap Portfolio ETF Seeks To Capture Emerging Small-caps (ETF: PZJ)

PowerShares Zacks Small-Cap Portfolio ETF (ETF:PZJ) began trading on Thursday. This 'semi-actively traded' fund tracks a Zacks small-cap index, and has a strategy of buying stocks of smaller companies after upside earnings surprises. The goal is to build positions in such companies and sectors after this positive signal, but before a wave of new investor inflows. ETF Zone's Will McClatchy adds:

Because PZJ depends on steady trading, turnover is 120% per year, which is far more than the typical passive ETF but about par for a traditional mutual fund. Ironically, this is where the ETF format comes in handy. "The reason for implementing the strategy as an ETF is tax efficiency," said Zacks. "If the strategy were implemented in a mutual fund, the majority of the gains would be taxed at the ordinary income rate. In an ETF the gains are taxed at the capital gains rate if the ETF is held long enough."

This small-cap fund joins a similar PowerShares' microcap fund (PZI) that also tracks a proprietary Zacks index.

More coverage of PZJ:

● Amex press release
● MarketWatch