Three Dorsey Wright ETFs have now been in existence for over 5 years. So, how have they done?
PDP (PowerShares DWA Momentum ETF), PIZ (PowerShares DWA Developed Markets Momentum ETF), and PIE (PowerShares DWA Emerging Markets Momentum ETF) are all the top performing strategies in their Morningstar category over the past 5 years. PDP and PIZ are also the top performing strategy in their category over the last 3 years, and PIE is in the top quintile.
Source: Morningstar, a/o 11/4/14
Part of the reason that it is so encouraging to see these types of results is because it confirms the thesis that Point and Figure can be effectively employed to generate alpha over time. Before we first partnered with PowerShares on these ETFs, there was extensive testing completed that gave us reason to be very optimistic about the types of returns that we might be able to achieve. But that was just testing (as important as testing is). These are live results and show how we stack up against a universe of our peers and against our benchmarks. There have been periods of outperformance and periods of underperfomance, just like there are likely to be in the future, but the process is clearly demonstrating its value.
This year, we have published much of our very best research that provides valuable insights into our investment process. These white papers can be found by clicking here, here, and here. The concluding paragraph from one of these white papers summarizes our findings:
Momentum is an investment factor that has worked very well for over a century. The momentum factor has been through bull markets, bear markets, and sideways markets and still continues to deliver oupterformance versus broad market benchmarks. Plotting a ratio of a security versus a benchmark on a point and figure chart is one way to objectively classify securities in to groups based on their intermediate and long-term relative strength characteristics.
The 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. Past performance is not indicative of future results.
[…] Perhaps some take our “single-factor” approach to investing as overly simplistic, but to us, price encompasses all relevant information for an investor. And the results have been compelling. For example, the three ETFs for which Dorsey Wright is the index provider and have been out for the past 5 years (PDP, PIZ, and PIE), all are the top strategies in their respective categories over the past 5 years. […]
[…] since it was launched in April of 2006, the answer would be that nothing has changed. Same for PDP, PIE, and PIZ and the rest of our line-up of investment strategies. In full disclosure, very occasionally we […]