Tuesday, March 5, 2013

In the aftermath of the post election correction last fall, Quant began to turn its focus to the US market.  We kicked off the holiday shopping season with 4 broad US Russell funds in the top ten on that Thanksgiving Friday and the following week we began to see the now familiar S&P 500 funds gaining top ranks.  By December 4th we realized it was going to be difficult to maintain our huge outperformance versus the S&P with three funds tracking the index in the top ten.  Santa brought his rally with those same Russell and S&P funds that represent the broad US market and were consistently earning top ranks.  The same story carried into the New Year with some energy funds joining the party and giving us a chance to outperform the index, and they did not disappoint.

Having all those broad US funds in the top ranks did make it difficult to beat the S&P 500 and our performance has come down from the stratosphere but is still in the clouds.  ETF Global is that rare firm that actually keeps track of how its top ranked funds perform and reports the results to our users and anyone else who wants to know.  On the publicly available part of our site you can see how our Green Diamond Reward Ratings and our Quant rankings have performed since inception last summer, suffice to say very well.  If your buy list comprises funds scoring 8 Green Diamonds or better, over a few months you have likely beaten the S&P 500 around 77% of the time, outperforming the index by about 50% on average.  The Quant performance report groups the funds differently but shows similar returns.

We would prefer to still be doubling the S&P 500 or better almost 90% of the time like before, but when the index is outperforming most others we are glad to be riding the lead horse.  That was Europe and emerging markets for periods last year and our models proved to be very nimble in recognizing shifts in the marketplace.  They haven’t all been winners as some high ranking tech funds lagged but they tended to be ones with lower Apple weightings than most and a couple of smart beta tech funds even outperformed.   The gold miners in GDX have been a sore point but that is a dandelion in a field of daisies (and still ranks in the top 100).  The model also passed on nice moves in financials and retail, the former still ranks poorly but retail has been gaining on improving technical scores.  Today’s top 10 basically looks like it has since the holidays comprising those three S&P 500 funds, 4 broad US Russell funds, with XOP and two smart beta funds rounding out the 10; all ten have lower than average Risk Ratings.  If you would like a personal tutorial on our ratings please send us an email to support@etfg.com. Ratings that perform combined with personal attention to our clients are just two of the ways ETFGsm adds value to your investment decision process.

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