Wednesday, February 13, 2013

There’s been remarkable stability in the top ranks for the past couple of days. As US markets close in on new highs that’s where Quant wants to maintain exposure and as large cap continues to dominate, a couple of small cap funds are also garnering Quant’s attention. Readers will recognize IWO and IWM, those are the tickers for today’s 3rd place iShares Russell 2000 Growth Fund and 6th place iShares Russell 2000 Fund.  Both have spent most of 2013 in the top ranks and have indeed earned those positions by outperforming the S&P 500’s monster year to date run.

That outperformance explains their solid technical scores where the broader IWM beats the growth focused IWO by 74.4 to 71.8.  The latter has outperformed the former year to date and gets a lower short term technical score as it becomes more overbought.  The market thinks both are already overbought which can be seen in their strong mid 70s sentiment scores driven by high put/call and short interest measures.  However, implied volatility of each is middling as the market appears complacent about the rally.  Fundamentally both funds score well driven by high yield scores and the higher ranking IWO also scores very well on the PE measure.  That does not mean it is cheaper than IWM, its PE is actually a little bit higher, it means it is cheaper relative to its historical valuation than IWM.

Their 3rd and 6th place rankings are close enough to warrant another screen to decide which you prefer.  Take a look at their tear sheets to see which sectors and constituents best fit your other investing themes.  If you like financials, you may prefer the lower ranked IWM with 22.5% of AUM in that sector, or if you prefer health care you may want IWO’s 20.2% of AUM there.  Both funds have info technology and industrials rounding out their top three sectors.  We’re glad you use ETF Global to round out your investment decision process and invite you to dig deeper by forwarding any questions you may have to  We will respond promptly with a one on one phone call if necessary, that’s just one of the ways we strive to show our appreciation to our users.

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