The PowerShares DWA SmallCap Momentum Portfolio (NYSEArca: DWAS) is one of this year’s top-performing small-cap ETFs and that is saying something because 2013 has been kind to smaller stocks.

In the second quarter “Small Caps effectively doubled the return of their Large Cap counterparts, showing that this performance trend is quite healthy. This quarter we did see that relationship hit a new all-time extreme as Small Caps continue to exploit the market environment and attract new investments at a faster rate than large caps,” according to Dorsey Wright & Associates.

DWAS has surged 28.3% year-to-date, proving that investors that opt to embrace stocks sporting strong relative strength traits will be rewarded.  The ETF’s methodology, which centers around identifying 200 small-caps with robust relative strength, may blur the line between active and passive management (officially, DWAS is passively managed), but the returns are not blurry. [This Small-Cap ETF Continues to Impress]

DWAS is 16 months old and in that time has accumulated over $410 million in assets under management while returning 40.2%. Over that time, the Dorsey Wright SmallCap Technical Leaders Index has handily outpaced rival benchmarks. [New Small-Cap ETF Smokes Russell 2000 in First Year]

In other words, DWAS is not broken, so it does not need to be fixed. However, the fund is rebalanced quarterly. During the most recent quarterly re-balancing there were 83 stocks removed from the DWA Technical Leaders Index and 83 new stocks were added to the index, said Dorsey Wright.

Here’s what DWAS currently looks like compared to one of its major rivals. Note DWAS has no exposure to rate-sensitive telecom or utilities stocks and that it features a scant allocation to staples names.

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.