Although PDP is off 1.1% year-to-date, investors should not ignore the fund, particularly if Treasury yields spike again. The momentum factor has a legacy of out-performance during rise rate environments. Looking at PDP’s secotr lineup, it is easy to see why the ETF could be an ideal rising rates play. [Right Time for This Momentum ETF]
Consumer cyclical and industrial names are two of the best-performing sectors in rising rate environments and those groups combine for over 52% of PDP’s weight. That is not to say PDP does not work when rates fall.
Since the ETF debuted on March 1, 2007, it has slightly outpaced the S&P 500 while only modestly more volatile. The five-year Sharpe Ratio on the Dorsey Wright Technical Leaders Index is also higher than that of the S&P 500, according to PowerShares data.
PDP Q2 Sector Weights
