Among the investment factors delivering solid returns this year is momentum, a fact confirmed by several momentum-based smart beta exchange traded funds hitting all-time highs on Wednesday.
The Powershares DWA Momentum Portfolio (NASDAQ: PDP), which utilizes technical analysis from Dorsey Wright and picks out stocks based on relative strength, was one of the momentum ETFs to reach record highs.
The momentum strategy basically bets that hot movers will continue to rise, so investors would buy high and sell even higher. Investors who want to follow this momentum strategy will be betting on outperforming sectors flying even higher.
PDP tracks the Dorsey Wright Technical Leaders Index, which usually includes 100 Nasdaq-listed companies.
“The Index is constructed pursuant to Dorsey, Wright & Associates, LLC’s proprietary methodology, which takes into account, among other factors, the performance of each of the approximately 1,000 largest companies in the eligible universe as compared to a benchmark index, and the relative performance of industry sectors and sub-sectors,” according to PowerShares.