DWAS tracks an index maintained by Dorsey, Wright & Associates designed to identify companies that demonstrate powerful relative strength characteristics. The benchmark is comprised of about 200 companies selected from a small-cap universe of approximately 2,000 of the smallest U.S. companies [New Small-Cap ETF Smokes Russell 2000]
“As we have seen in other asset classes, the relative strength return factor has enjoyed a market environment conducive to good outcomes, and so far DWAS has provided just that to its investors in 2013,” according to Dorsey Wright.
Other small-cap ETFs that also outpaced IWM last quarter include the iShares Russell 2000 Growth ETF (NYSEArca: IWO) and the iShares S&P Small-Cap 600 Growth ETF (NYSEArca: IJT). That pair gained an average of 12%.
The revenue-weighted RevenueShares Small Cap (NYSEArca: RWJ) delivered a third-quarter gain of 11.7% while the SPDR S&P 600 Small Cap Growth ETF (NYSEArca: SLYG) returned 11.2%. The iShares Russell Microcap ETF (NYSEArca: IWC) added 11%.
“For now, the dominant trend remains Small Caps over Large Caps, and while both are generally rising, we continue to steer toward the smaller of US companies where possible,” said Dorsey Wright.
Investors have taken note of the potency of DWAS. Of the ETF’s $428.2 million in assets under management, over $375 million has come into the fund since the start of this year.
PowerShares DWA SmallCap Momentum Portfolio
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of IWC and IWM.