Systematic Relative Strength

Sam Ro at Business Insider makes a key point about Emerging Markets:

Many investors have gotten used to lumping the world’s emerging markets into one big asset class.

But in the past year, the drama in Turkey, Venezuela, Argentina, Russia, Indonesia, India, China … all of these countries have had unique local stories that made it very clear that the emerging markets should not be considered as one big thing.

“Amid the pervasive bearishness about developing economies, the term ‘emerging markets’ has never been more unhelpful and misleading,” said Nicholas Spiro last month. “Differentiation remains the watchword, and it’s time the term ‘emerging markets’ was jettisoned.”

Differentiation is the key when it comes to the PowerShares DWA Emerging Markets Momentum ETF (PIE). We evaluate the broad universe of emerging market securities and identify the 100 securities with, what we believe to be, superior relative strength characteristics. The index is rebalanced quarterly.

Performance of PIE vs. EEM over the last 5 years is as follows:

Source: Yahoo! Finance, Performance does not include dividends or transaction costs

Click here to view the current holdings in PIE.

A relative strength strategy is NOT a guarantee. There may be times where all investments and strategies are unfavorable and depreciate in value. Past performance is no guarantee of future returns. Potential for profits is accompanied by possibility of loss. Dorsey Wright & Associates is the index provider for The PowerShares DWA Emerging Markets Momentum ETF (PIE).

This entry was posted on Wednesday, March 26th, 2014 at 11:44 am and is filed under Momentum. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.