Five PowerShares International ETFs Begin Trading

Five new international ETFs have hit the market. The new PowerShares FTSE RAFI ETFs began trading today on the Amex along with the international private equity ETF the firm filed for earlier this year.

Three of the funds based on RAFI indexes cover the small/midsize market segments of global regions. They include the PowerShares FTSE RAFI Asia-Pacific Ex-Japan Small-Mid Portfolio (PDQ), the PowerShares FTSE RAFI Developed Markets ex-U.S. Small-Mid Portfolio (PDN) and the PowerShares FTSE RAFI Europe Small-Mid Portfolio (PWD). The small and midsize segments of international markets are becoming popular areas of investment for purposes of international diversification now that international large-cap markets are correlating more closely with U.S. large-cap stocks. The three funds complement existing PowerShares ETFs covering the large-cap segments of those same three regional markets. PWD and PDN have expense ratios of 0.75%, while PDQ's is 0.80%. Options contracts will be available for all three funds.

The fourth FTSE RAFI-based ETF is the PowerShares FTSE RAFI Emerging Markets Portfolio (PXH), which tracks the largest stocks in the emerging markets region. It is the second fundamentally weighted emerging markets ETF, joining the WisdomTree High Yielding Emerging Markets ETF (DEM). Emerging markets have been getting a lot of attention lately, as they have outperformed developed markets for the past few years. PXH's expense ratio is a rather gasp-inducing 85 basis points, although expenses are usually higher for emerging markets funds. Still, DEM's is just 63 basis points, while the market-cap-weighted iShares MSCI Emerging Markets Index Fund (EEM) has an expense ratio of 75 basis points.

The fifth and final ETF in the group launch focuses on a segment of the market that was getting a lot of attention recently but which has suffered under the onset of the credit crunch. The PowerShares International Listed Private Equity Portfolio (PFP) will track the Red Rocks International Listed Private Equity Index, which covers more than 30 listed companies trading around the world which, combined, have investments in more than 1,000 private companies. The fund has an expense ratio of 0.75%.

With the addition of these funds, PowerShares has expanded its offering of international ETFs at a time when outperforming international markets are getting a lot more attention from U.S. investors. That fact may give them an edge in accumulating assets, since the sheer volume of ETF launches means that new funds are struggling to attract investors.

Written by Heather Bell