Monday, October 21, 2013

ETFG Quant vs Reward Score:

We’ve talked about both the ETFGsm Quant model and the Green Diamond Reward score, but everyone might not know the difference between the two models.  The ETFGsm Quant is based off 4 broad categories of factors.   They are Behavioral, Fundamental, Global Theme, and Quality factors.  The Green Diamond Reward score is a subset of the Quant model.  The Reward score is just the Behavioral and Fundamental factors only.  It excludes the more macro Global Theme and Quality factors.  This leads to subtle differences between the top ETPs scored by the models.

Viewing the Quant model, the top two scored ETPs are XOP and PXE which are both Energy focused funds.  The top scored product (XOP) is SPDR’s Oil and Gas Exploration fund and the second highest scored product is Powershares smart beta Energy fund.

If you look at the funds based off their Green Diamond Reward score, the top fund iShares FTSE/Xinhua China 25 Index Fund (FXI) receives the high score of 10.  iShares MSCI AC Asia Information Tech  (AAIT) gets the second highest Reward score at 9.85.

You can see Quant’s slight favor for Energy over what the Green Diamond Reward score likes.  FXI and AAIT score 3rd and 4th on Quant’s list.  Depend on your objects and views, it’s always good to see what both models are favoring.

Happy Monday and thanks for reading ETFG Daily Perspectives

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