Powershares' Microcap ETF

In our July 7 posting we reported about a recent interest among Financial
institutions to capitalize on the popularity and recent strong performance
of microcap stocks. Here we report about another Exchange Traded Fund
(ETF). The PowerShares Zacks Micro Cap Portfolio is set to debut on the
American Stock Exchange on Thursday Aug. 18, taking the firm's ETF
count to 20.

The PowerShares ETF will track a semiactive microcap index from Chicago
-based Zacks Investment Research, known for its models that focus on
earnings surprises and upward analyst revisions. While most indexes
attempt to provide market-style exposure, the Zacks Micro Cap
benchmark is designed to pick outperforming stocks based on value,
momentum and liquidity factors. In an interesting methodology twist, the
Zacks index will be evaluated weekly for possible stock deletions. The
frequent reviews should lead to higher turnover, but gives the index much
of its active-management flavor.

Through the end of June, the Zacks Micro Cap index has averaged annual
returns of 23.5% over the past five years, while the small-cap Russell
2000 index (RUT) has a 5-year annualized return of 5.7% over the same
period and the S&P 500 (SPX) lost 2.4% annually.

The new ETF may begin trading before a similar fund, still in the
registration process, from Barclays Global Investors, the industry's largest
player with more than $133 billion in assets at the end of June. Relative
newcomer PowerShares recently broached the $1 billion asset mark.

The ETFs are expected to be a hit with investors based on the strong
recent performance of microcap stocks and the tendency of microcaps to
reduce overall portfolio risk because they often don't move in lockstep
with the broad market.