Investing in exchange traded funds with alternative weighting methodologies is catching on. One group of ETFs that confirms that notion are ETFs based on relative strength signals.

Proof positive is the four-ETF suite of PowerShares funds based on Dorsey Wright & Associates indices that use relative strength as a primary weighting tool to find stocks with positive momentum characteristics. Well-known ETFs in that group include the PowerShares DWA Emerging Markets Momentum Portfolio (NYSEArca: PIE) and the PowerShares DWA SmallCap Momentum Portfolio (NYSEArca: DWAS), one of this year’s best small-cap ETFs.[Soaring Small-Cap ETF Changes Things Up]

However, it is the PowerShares DWA Momentum Portfolio (NYSEArca: PDP) that is the first of the four funds to reach the $1 billion in assets under management mark. As of Tuesday, PDP had $1.02 billion in assets, according to PowerShares. 

PDP, which debuted in March 2007, tracks the Dorsey Wright Technical Leaders Index. Appropriate measuring sticks for that index would be the Russell 3000 and the S&P 500 Growth Index.

While PDP is a momentum play, it is tilted away from small-caps with a mid-cap bias. Mid-cap value and growth names combine for nearly two-thirds of PDP’s weight. Large-cap growth stocks command another 27%. Top-10 holdings include “momo” names like Apple (NasdaqGM: AAPL), Priceline (Nasdaq: PCLN) and Gilead Sciences (NasdaqGM: GILD). None of ETF’s holdings receives a weight north of 2.96%.

The Dorsey Wright Technical Leaders Index has outpaced the S&P 500 Growth Index while slightly lagging the Russell 3000 this year. However, for the three-years ending September 30, the Dorsey Wright Technical Leader Index had outperformed the S&P 500 Growth Index by 620 basis points and the Russell 3000 by nearly 300 basis points, according to PowerShares data.

Like the other DWA ETFs, PDP rebalances quarterly and those changes are worth noting.

“During the most recent quarterly rebalancing there were 20 stocks removed from the DWA Technical Leaders Index and 20 new stocks were added to the index. So, while 20% of the PDP holdings have turned over from quarter-to-quarter, 80% of the stocks that were in the index coming into the third quarter have maintained their superior positive relative strength and thus remain in the index heading into the final quarter for 2013,” according to Dorsey Wright.

Here’s a look at PDP’s new additions (charts courtesy Dorsey Wright & Associates)

And the subtractions…

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