While most sector ETFs are capitalization-weighted, the PowerShares DWA Momentum Sectors are, as the name suggests, weighted by momentum. The nine momentum sectors are shown below:
To highlight the attributes of one of these momentum sector ETFs, The PowerShares DWA Consumer Cyclicals Momentum ETF (PEZ), consider the following:
- PEZ has 40 holdings while many cap-weighted Consumer Cyclical sector ETFs have 2-4 times that many holdings. The number of holdings in each of our momentum sector ETFs can range from approximately 30-75.
- The average technical attributes of the stocks currently in PEZ is 4.70. (Dorsey Wright’s research database assigns all stocks a technical attribute rating of 0-5, 5 being the strongest and 0 being the weakest)
- PEZ has exposure to large, mid, and small cap Consumer Cyclical stocks, while, by definition, capitalization-weighted sector ETFs focus on large caps. PEZ’s capitalization exposure is shown below:
- Those investors interested in a sector rotation model using these momentum sector ETFs can click here.
This example is presented for illustrative purposes only and does not represent a past recommendation. A relative strength strategy is NOT a guarantee. There may be times where all investments and strategies are unfavorable and depreciate in value. Dorsey Wright is the index provider for the suite of PowerShares DWA Momentum ETFs. See www.powershares.com for more information.