Quantitative strategies pertaining to exchange traded fund (ETF) investing are one of the newest approaches available. Also known as a fundamental approach to ETF investing, this strategy weighs holdings in ETFs by various factors such as dividends, sales and profits rather than traditional market capitalization. The idea behind the quantitative approach is that ETFs that use it might outperform the general market indexes.
However, as Matt Hougan for Index Universe looks at a few "quant" ETFs that have been around since May 2003, the results are not as hopeful as the creators intended. Examining PowerShares Dynamic Market (PWC) and PowerShares Dynamic OTC (PWO) reveals that although these quantitative ETFs started out strong, their performances have waned recently compared to their benchmarks. These ETFs have short-term track records, so the jury is still out on whether they will outperform in the longrun. Will these ETFs be able to deliver the performance they hope?
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.