Two Targeted Smart Beta ETF Strategies for the Discerning Investor

Invesco PowerShares rolled out two new smart beta exchange traded funds on Thursday, helping investors target the S&P 500 value segment with a momentum focus and the small-cap category with a quality twist.

PowerShares launched the PowerShares S&P 500 Value With Momentum Portfolio (BATS: SPVM) and the PowerShares S&P SmallCap Quality Portfolio (BATS: XSHQ). SPVM has a 0.30% expense ratio and XSHQ has a 0.29% expense ratio.

“We’re putting client outcomes and investment preferences at the center of our product development process,” Jason Bloom, Global Market Strategist at PowerShares by Invesco, said in a note. “Working closer with clients to understand their unique investment objectives has led to more strategic ETF solutions that have purpose in a portfolio.”

SPVM tries to reflect the performance of the S&P 500 High Momentum Value Index, which tracks 100 stocks within the S&P 500 with attractive valuations that have also exhibited positive forward momentum.

The value metric is based on price-to-boo, price-to-earnings and price-to-sales, with the most attractively valued stocks selected for the next momentum screen. From the 200 most attractively valued stocks, the 100 with the highest positive momentum are then selected for the underlying index and then weighted by their value score.