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Powershares Build America Bond

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PowerShares Build America Bond Portfolio (NYSEArca: BAB) is an exchange-traded fund (ETF) that seeks to replicate the price and yield performance of the BofA Merrill Lynch Build America Bond Index. The index is comprised of approximately 350 issues, which are issued by state and local government entities in the United States.

The Build America Bond (BAB) program was created as part of the American Recovery and Reinvestment Act of 2009 to help state and local governments fund infrastructure projects. BABs are taxable municipal bonds that offer a federal subsidy in the form of a tax credit to issuers. This subsidy allows issuers to pay higher yields than they would otherwise be able to offer on traditional tax-exempt municipal bonds.

BABs have a number of features that make them attractive to investors, including:

* Higher yields than traditional municipal bonds

* Federal tax-credit subsidy

* Potential for capital appreciation

* Diversification benefits from exposure to a different sector of the bond market

However, BABs also have some risks that investors should be aware of, including:

* Interest rate risk: Like all bonds, BABs are subject to interest rate risk. When interest rates rise, the prices of existing bonds fall, which can lead to losses for investors.

* Credit risk: BABs are issued by state and local governments, which can have varying creditworthiness. Investors should be aware of the credit quality of the issuers in the ETF's portfolio.

* Liquidity risk: BABs may have lower trading volumes than other types of bonds, which can make it more difficult to buy or sell them without affecting their price.

Overall, Powershares Build America Bond Portfolio can be a useful tool for investors seeking to gain exposure to the BAB market. However, as with any investment, it's important to thoroughly research the ETF and its underlying holdings before making a decision.