Exchange traded funds (ETFs) that employ non-traditional strategies are capturing investors’ imaginations.
By straying from tradition, the rules-based quant strategy ETF promises pumped up returns by hedging a portfolio or taking a directional bet on a sector, niche or market, explains Scott Martindale for Trading Markets.
This next generation of indexing uses a wide range of factors, including fundamental, technical and sentiment-oriented, to get a subset of top-ranked stocks within the index. This is accomplished through a multi-factor, quantitative indexing approach, which is transparent, back-testable and repeatable.
Some of the quant-based ETFs are:
- PowerShares Dynamic Large-Cap Value (PWV): down 8.4% year-to-date
- PowerShares Dynamic Industrials Report (PRN): down 2.6% year-to-date
- Claymore/Zacks Sector Rotation Portfolio (XRO): down 9.1% year-to-date
- Claymore/Sabrient Insider Portfolio (NFO): down 7.2% year-to-date
If you’re comfortable with the idea of these ETFs, want to break with a little tradition and these funds are above their trend lines, it will be nice to have these funds as an option.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Mr. Lydon serves as an independent trustee of certain mutual funds and ETFs that are managed by Guggenheim Investments; however, any opinions or forecasts expressed herein are solely those of Mr. Lydon and not those of Guggenheim Funds, Guggenheim Investments, Guggenheim Specialized Products, LLC or any of their affiliates. 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.