PFI’s nearly 26.5% allocation to REITs is the ETF’s largest industry by nearly 780 basis points over insurance providers. That has positioned the ETF nicely to take advantage of this year’s tumble in Treasury yields. [Falling Treasury Yields Lift REIT ETFs]
Five of PFI’s top-10 holdings are REITs. Also found among that top-10 lineup is Invesco (NYSE: IVZ), parent company of PowerShares, shares of which are up 10.4% this year.
PFI’s REIT allocation would appear to make the ETF sensitive to rising rates, but that underscores the utility of the underlying index’s methodology. If momentum for REITs wanes, exposure to the industry will be reduced. Additionally, the ETF allocates 18.7% of its weight to insurance providers and features five regional banks among its 43 holdings. Those are two financial services sub-sectors that typically thrive when Treasury yields rise. [Insurance ETFs Wait on Higher Interest Rates]
PFI is only home to one money center bank – Wells Fargo (NYSE: WFC) – and one Wall Street bank – Morgan Stanley (NYSE: MS). The ETF sports a P/E ratio of 17.6 and a price-to-book ratio of 1.9, according to issuer data.
PowerShares DWA Financial Momentum Portfolio
