PowerShares revolutionised the ETF market by pioneering smart-beta and rules-based investing, moving beyond traditional market-cap-weighted indexes. Its philosophy centred on enhanced indexing, combining passive investing with active strategies to outperform conventional benchmarks. PowerShares ETFs often use fundamental factors (like earnings, dividends, and book value) rather than just company size, aiming to capture undervalued or high-growth opportunities more efficiently. For example, its FTSE RAFI US 1000 ETF (PRF) weights stocks based on economic strength rather than market cap, reducing overexposure to overvalued companies.

Another key aspect was thematic and sector-specific investing, offering ETFs targeting niche trends like clean energy, blockchain, or low-volatility stocks. PowerShares also embraced quantitative models, such as momentum, quality, and minimum volatility, to provide strategic diversification. Unlike traditional ETFs that simply tracked indexes, PowerShares incorporated dynamic rebalancing and multi-factor approaches to adapt to market conditions.

The firm’s innovation laid the groundwork for modern factor-based and smart-beta ETFs, influencing competitors like iShares and Invesco (which later absorbed PowerShares). While some strategies carried higher fees than plain-vanilla ETFs, PowerShares’ philosophy emphasised strategic outperformance over mere index replication, appealing to investors seeking a middle ground between passive and active management.

PowerShares, later acquired by Invesco, built its ETF strategies on the idea of providing smarter alternatives to traditional index funds. Instead of simply tracking broad market benchmarks, PowerShares emphasised “intelligent indexing” through rules-based and factor-driven approaches. Their philosophy was to capture enhanced returns, manage risks, and provide diversification by targeting specific themes, sectors, or investment factors such as momentum, value, or low volatility. This approach appealed to investors seeking more precision than standard market-cap weighted ETFs. By combining innovation with cost efficiency, PowerShares aimed to democratize access to strategies once limited to institutional investors. Their focus was on creating ETFs that aligned with long-term investor goals while adapting to changing market conditions.