Friday, June 7, 2013

They say today’s job report has to be just right, too hot and the Fed will take the needle out of the market’s arm and too cold will expose monetary policy as pushing on a string, call it the inverse Tepper trade.  Quant suggests Goldilocks is going to find that perfect job as 8 of today’s top 10 are US funds with Switzerland’s EWL and the gold miners in GDX rounding out the group.  It could be a flight to quality ahead of a storm but we see a growth bias in today’s top selections with technology, energy, mid caps and small caps appearing atop the Quant page.  Most are familiar to this space but we have not written about the 7th place Powershares Fundamental Pure Mid Growth Portfolio (PXMG).

The fund tracks a fundamentally weighted Research Affiliates index and its substantial annual turnover suggests some smart beta component of the index strategy.  So far in 2013 it has outperformed the S&P 500 during rallies but given much back in the few minor selloffs seen in February, April and the last few weeks.  The full breakout of its low 3.86 Red Diamond Risk Rating shows a nice spread between a 5.34 volatility score and a 3.79 deviation score so if you think the market is ready to rally again this could be a good way to ride it.  That choppy performance hasn’t helped its low Behavioral Score at 52.5 but it scores very well on the other side with a 97.8 Fundamental Score.  The colorful pie charts on its Tear Sheet resemble Elvis’ morning medications with every sector but utilities represented and three pages of industry exposures within its 107 constituents.

Today is the second time this year that PXMG has made the top 10 and its 9th place rank on April 18th proved to be a good entry point.  Getting back up top may signal a resumption of the rally or its strong fundamentals may be a safe harbor in case Goldilocks doesn’t get that job or if it’s only part time flipping burgers.  Maybe the small and mid caps are scoring better because they are less susceptible to the currency volatility rattling world markets.  We’ll let you decide but whether you think we are heading up or down, take a look at PXMG for your equity allocation.  Thanks for taking a look at ETF Globalsm Daily Perspectives and have a nice weekend.

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