1-Star ETFs Poised to Plunge: PowerShares VRDO Tax-Free Weekly?

Based on the aggregated intelligence of 180,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, PowerShares VRDO Tax-Free Weekly (NYS: PVI) has received the dreaded one-star ranking.

With that in mind, let's take a closer look at PVI and see what CAPS investors are saying about the ETF right now.


InceptionNovember 2007
Total Net Assets$336.2 million
Investment ApproachSeeks investment results that correspond to the price and yield of the Bloomberg US Municipal AMT-Free Weekly VRDO Index. The fund generally invests at least 80% of its total assets in variable rate demand obligation bonds that are exempt from federal income tax with interest rates that reset weekly.
Expense Ratio0.25%
Year-to-Date / 1-Year / 3-Year Returns0% / 0.2% / 0.4%
Dividend Yield0.3%

SPDR Nuveen Barclays Capital Short Term Municipal Bond ETF

iShares S&P Short Term National AMT-Free Municipal Bond Fund

Sources: S&P Capital IQ and Motley Fool CAPS.

On CAPS, 59% of the 29 members who have rated PVI believe the ETF will underperform the S&P 500 going forward.

Just last month, one of those Fools, All-Star TerryHogan, succinctly summed up the PVI bear case for our community:

All this ETF will ever produce is an equivalent to short-term rates paid by municipalities. Since they're tax-free yields, I'd imagine the rates will be even lower than short-term corporate rates. So basically you're getting nothing after the management fee. I can't believe anyone buys this.

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The article 1-Star ETFs Poised to Plunge: PowerShares VRDO Tax-Free Weekly? originally appeared on Fool.com.

Fool contributorBrian Pacamparaowns no position in any of the companies mentioned.Try any of our Foolish newsletter servicesfree for 30 days.We Fools may not all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Fool'sdisclosure policyalways gets a perfect score.

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