Upcoming event: DWA Technical Leaders Index Webinar

September 6, 2012

It is that time of year again – back to school and back to basics. The spontaneity of summer living has come to an end, and the regular routine picks back up again. Cycles like these are not as clear cut in the market; there is no such thing as a “normal routine” in the financial markets. With that in mind, you must have the knowledge and tools to be able to adapt to changing markets. This concept of positioning your investments toward current trends serves as the driving force behind our DWA Technical Leaders Indexes.  As many of you are already aware, our relative strength-driven Technical Leaders Indexes serve as the underlying indexes for four PowerShares ETFs, each focusing in different segments of the global equity market.

DWA Technical Leaders Index PowerShares ETFs:

  • PowerShares DWA Technical Leaders Portfolio [PDP]
  • PowerShares DWA SmallCap Technical Leaders Portfolio [DWAS]
  • PowerShares DWA Developed Markets Technical Leaders [PIZ]
  • PowerShares DWA Emerging Markets Technical Leaders [PIE]

Next week we will be conducting a Webinar discussing the RS strategies behind the Technical Leaders Indexes, and practical implementation ideas for using these products to access market leaders and help leverage your business. Tom Dorsey, President of DWA; Tammy DeRosier, Executive Vice President; and John Lewis, Vice President & Portfolio Manager, will host the discussion on Thursday, September 13th, 2012 at 12:15 PM ESTThere is no cost to attend the webinar.  If you are interested in attending, please register today.

Note: This webinar will be recorded and made accessible for viewing at a later date. In order to receive the recording, please sign up here.

Breaking news: PDP Breakout

On a related note, the  PowerShares DWA Technical Leaders Index (PDP) had a double top breakout on Tuesday (Sept 4).  This breakout continues a series of higher highs and higher lows above the bullish support line.  The daily momentum is getting closer to turning back to positive as well after having been negative for almost two weeks.  The breakout on the chart provides an excellent entry point for new positions.  A couple of points to note about the PDP:

  • The PDP continues to perform well this year, up 15.11% compared to 11.72% for the S&P 500.
  • The largest sector weighting remains Consumer Discretionary at 31.70% and Financials are next at 18.14%.
  • We continue to see advisors using the PDP as a sector rotation solution, in a PDP / SPLV strategy, as well as for general equity exposure as US equities remain the strongest asset class in DALI.

(These are pure price returns which are not inclusive of dividends, fees, or expenses.)

Please take advantage of this webinar for timely market updates and strategies.

 

The information contained herein has been prepared without regard to any particular investor’s investment objectives, financial situation, and needs.  Accordingly, investors should not act on any recommendation (express or implied) or information in this material without obtaining specific advice from their financial advisors and should not rely on information herein as the primary basis for their investment decisions.  Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources believed to be reliable (“information providers”).  However, such information has not been verified by Dorsey, Wright & Associates, LLC (DWA) or the information provider and DWA and the information providers make no representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein.  DWA and the information provider accept no liability to the recipient whatsoever whether in contract, in tort, for negligence, or otherwise for any direct, indirect, consequential, or special loss of any kind arising out of the use of this document or its contents or of the recipient relying on any such recommendation or information (except insofar as any statutory liability cannot be excluded).  Any statements nonfactual in nature constitute only current opinions, which are subject to change without notice.  Neither the information nor any opinion expressed shall constitute an offer to sell or a solicitation or an offer to buy any securities, commodities or exchange traded products.  This document does not purport to be complete description of the securities or commodities, markets or developments to which reference is made.  

The Dorsey Wright SmallCap Technical Leaders Index is calculated by Dow Jones, the marketing name and a licensed trademark of CME Group Index Services LLC (“CME Indexes”). “Dow Jones Indexes” is a service mark of Dow Jones Trademark Holdings LLC (“Dow Jones”).

Products based on the Dorsey Wright SmallCap Technical Leaders IndexSM, are not sponsored, endorsed, sold or promoted by CME Indexes, Dow Jones and their respective affiliates make no representation regarding the advisability of investing in such product(s).

Past performance is not indicative of future results.  Potential for profits is accompanied by possibility of loss.    You should consider this strategy’s investment objectives, risks, charges and expenses before investing.  The examples and information presented do not take into consideration commissions, tax implications, or other transaction costs.  

Each investor should carefully consider the investment objectives, risks and expenses of any Exchange-Traded Fund (“ETF”) prior to investing. Before investing in an ETF investors should obtain and carefully read the relevant prospectus and documents the issuer has filed with the SEC.  To obtain more complete information about the product the documents are publicly available for free via EDGAR on the SEC website (http://www.sec.gov)

Posted by:


Uncertainty and its Investment Implications

September 6, 2012

Uncertainty is usually problematic for investors.  If the economy is clearly good or decidedly bad, it’s often easier to figure out what to do.  I’d argue that investors typically overreact anyway, but they at least feel like they are justified in swinging for the fence or crawling into a bomb shelter.  But when there is a lot of uncertainty and things are on the cusp—and could go either way—it’s tough to figure out what to do.

The chart below, from the wonderful Calculated Risk blog, demonstrates the point perfectly.

Source: Calculated Risk  (click to enlarge)

You can see the problem.  The Purchasing Managers’ Index is hovering right near the line that separates an expanding economy from a contracting one.  There’s no slam dunk either way—there are numerous cases of the PMI dropping below 50 that didn’t result in a recession, but also a number that did have a nasty outcome.

So what’s an investor to do?

One possibility is an all-weather fund that has the ability to adapt to a wide variety of environments.  The old-school version of this is the traditional 60/40 balanced fund.  The idea was that the stocks would behave well when the economy was good and that the bonds would provide an offset when the economy was bad.  There are a lot of 60/40 funds still around, largely because they’ve actually done a pretty reasonable job for investors.

The new-school version is the global tactical asset allocation fund.  The flexibility inherent in a tactical fund allows it to tilt toward stocks when the market is doing well, or to tilt toward bonds if equities are having a rough go.  Many funds also have the potential to invest across alternative asset classes like real estate, commodities, or foreign currencies.

For a client that is wary of the stock market—and that might include most clients these days—a balanced fund or a global tactical asset allocation fund might be just the way to get them to dip their toe in the water.  They are going to need exposure to growth assets over the long run anyway and a flexible fund might make that necessary exposure more palatable.

Click here to visit ArrowFunds.com for a prospectus & disclosures.  Click here for disclosures from Dorsey Wright Money Management.

Posted by:


Fund Flows

September 6, 2012

The Investment Company Institute is the national association of U.S. investment companies, including mutual funds, closed-end funds, exchange-traded funds (ETFs), and unit investment trusts (UITs).  Flow estimates are derived from data collected covering more than 95 percent of industry assets and are adjusted to represent industry totals.

Posted by: