Client Sentiment Survey - 5/29/13

May 29, 2013

Here we have the next round of the Dorsey, Wright Sentiment Survey, the first third-party sentiment poll. Participate to learn more about our Dorsey, Wright Polo Shirt raffle! Just follow the instructions after taking the poll, and we’ll enter you in the contest. Thanks to all our participants from last round.

As you know, when individuals self-report, they are always taller and more beautiful than when outside observers report their perceptions! Instead of asking individual investors to self-report whether they are bullish or bearish, we’d like financial advisors to weigh in and report on the actual behavior of clients. It’s two simple questions and will take no more than 20 seconds of your time. We’ll construct indicators from the data and report the results regularly on our blog–but we need your help to get a large statistical sample!

Click here to take Dorsey, Wright’s Client Sentiment Survey.

Contribute to the greater good! It’s painless, we promise.

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Dividend-Paying Stocks: Getting a Broader Picture

May 29, 2013

Among the biggest investor-driven trends in the market right now is the thirst for yield. The paltry yields available in most sectors of fixed income just are not providing the type of income that investors are looking for and so they are increasingly looking at earning that yield from dividend-paying stocks. However, an exclusive focus on yield provides an incomplete picture of the returns that an investor may achieve. There is also the performance of the stock itself that must be factored into the evaluation.

When we rank our universe of securities to construct the First Trust Dorsey Wright Dividend UITs, our relative strength ranks are determined by the total return of the stocks (price return + yield). For comparison’s sake, consider the construction methodology of the S&P; Dividend SPDR (SDY) which is based upon the S&P; High Yield Dividend Aristocrats Index. That index is designed to measure the performance of the highest dividend yielding S&P; Composite 1500 Index constituents that have followed a managed-dividends policy of consistently increasing dividends every year for at least 20 consecutive years.

In the table below, I show the top 10 holdings for both SDY and for the First Trust Dorsey Wright Dividend UIT, Series 9. While the top 10 holdings for SDY have a slightly higher yield, the top 10 holdings of the Dorsey Wright UIT have had better total returns over the past 12 months.

uit2 05.29.13

Source: AllETF.com and First Trust; Performance Source: Yahoo! Finance

Evaluating dividend-paying stocks from a total return perspective seems to be fairly uncommon, yet it can make a significant difference in performance for the client while still allowing them to seek above-market yields.

Past performance is not indicative of future results. Potential for profits is accompanied by possibility of loss. See http://www.ftportfolios.com for more information.

13 Comments | Markets, Thought Process | Permalink

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PIE: “Heat-Seeking Predator”

May 29, 2013

You’ve got to check out this video of a Bloomberg analyst putting up scenes from Predator while talking about our PowerShares DWA Emerging Markets Technical Leaders ETF (PIE). Starts at the 1 hour 15 minute mark. PIE is getting a lot of attention this year due to its large outperformance versus other emerging market ETFs.

Past performance is not indicative of future results. Potential for profits is accompanied by possibility of loss. See www.powershares.com for more information. A list of all holdings for the trailing 12 months is available upon request.

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High RS Diffusion Index

May 29, 2013

The chart below measures the percentage of high relative strength stocks that are trading above their 50-day moving average (universe of mid and large cap stocks.) As of 5/28/13.

The 10-day moving average of this indicator is 88% and the one-day reading is 84%.

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