One of the hottest trends in the ETF market is smart beta where periodic security selection is based on computer algorithms rather than humans who are susceptible to bias. Think of Quant’s move to the US late last year as the fiscal cliff debate was heating up; we didn’t see too many pundits recommending the US as those Armageddon countdown clocks were clicking away on our TV screens. As those clocks now count the gap to US all time highs, three such smart beta funds are scoring well again today. Readers know we have been looking closely at how these funds perform and we have not been disappointed.
All three have been scoring well throughout this young year. The Powershares Dynamic Energy E&P Fund (PXE) got as high as 11th place on January 16th and is at 7th today after gaining about 10% in those few weeks. Its cousin, the Powershares XTF: Dynamic OTC Portfolio Fund (PWO) began the year at 5th place and is at 8th place this morning. A rare OTC fund that does not own Apple, it is up about 6% YTD, a little ahead of the S&P 500. The third is today’s 11th place Powershares Dynamic Energy Fund (PXI) also scoring well since its 2nd place rank on January 2nd. That one has almost doubled the S&P 500’s impressive January returns. The two energy funds get very nice mid 70s scores on technicals and fundamentals but PXI gets a slightly lower Sentiment Score of 63 to PXE’s 73. The OTC fund gets lower behavioral scores but a very high 90 Fundamental Score. All 3 have very attractive Risk Return spreads with 8 or 9 Green Diamonds but only 4 Red.
If you are not familiar with the term smart beta, prepare to hear more about it because various strategies within the space are performing well and more are coming to market. The aforementioned three haven’t always performed as well as they have lately but our own smart beta algorithm picked up on them at a good time. As 2013 becomes the year of smart beta, Quant says it’s no gimmick. Take a look and send any questions along to us at email@example.com , we are here to keep you apprised.