Conversely, DWAS only features a 14.4% weight to financial services stocks compared to 25.3% in IWM. That could prove advantageous for DWAS if interest rates remain low for a significant period because smaller financial services firms would like to see rates rise to have their net income margins boosted.
Speaking of rising rates, it should be noted that the smaller stocks and momentum factors have a history of delivering out-performance as rates rise. Additionally, DWAS allocates almost 45% of its weight to consumer discretionary, technology and industrial names, three of the better-performing sectors when rates rise. [A Small-Cap ETF for Rising Rates]
Investors have remained pensive, pulling $74 million from DWAS this month, but the ETF could defy skeptics if it can move above resistance at $38.
PowerShares DWA SmallCap Momentum Portfolio
