Being very technically centric in terms of our market analysis and our trading decisions in general when it comes to ETFs, two ETFs that are periodically on our radar thanks to their Technical bents are PDP (PowerShares DWA Technical Leaders, Expense Ratio 0.60%) and DWAS (PowerShares DWA SmallCap Technical Leaders, Expense Ratio 0.60%).
PDP has grown into a $1.26 billion fund since its 2007 inception, and has most of its concentration in Mid Cap stocks (about 58% of the portfolio) despite a top weighting and 3.29% in AAPL that we see in the portfolio.
Other top holdings are lesser known names in some cases like JAZZ (2.98%) and STRZA (2.54% and the number five ranking), but there is also exposure to GILD (2.82%) and PCLN (2.76%). When combing for stocks for inclusion the methodology scans through 3,000 of the largest U.S. listed equities and looks for relative strength in terms of technical price action according to Dorsey Wright’s proprietary system.
Dorsey Wright has been in the technical analysis space for decades and has been heavily involved with ETFs for some time now as well, so it is not terribly surprising to see such ETFs receive such traction.
DWAS as its name suggests is Small Cap equity oriented and a newer launch (July 2012) but it follows the same basic premise as PDP in terms of its stock investing methodology.
The fund has a respectable AUM level of $453 million with top holdings of equities that are far from household names (KS, AXDX, EXAS, ACAD, and SUNE for example), and unlike PDP there are about two hundred underlying names in the portfolio at all times instead of 100.
DWAS is even more interesting to look at right now given the huge break-out that we have seen in Small Cap equities in the past two sessions, as one can look no farther than a short term price chart of IWM (iShares Russell 2000, Expense Ratio 0.24%) for confirmation of this.
Fund flows have been modest in these funds lately, as PDP has only pulled in about $11 million year to date, while DWAS, which is actually bumping up against its 200 day moving average for the first time this morning for the first time since late April, has actually seen net asset outflows year to date ($-119 million).
PowerShares DWA SmallCap Momentum Portfolio
For more information on Street One ETF research and ETF trade execution/liquidity services, contact Paul Weisbruch at email@example.com.
Street One Financial is an educational/research firm utilizing the Broker Dealer services of Precision Securities, a FINRA registered Broker/Dealer.