PowerShares Changes Name and Index for 9 Sector ETFs - ETF News And Commentary


Invesco PowerShares, one of the world's biggest ETF providers, enjoyed huge success with the PowerShares DWA Momentum suite of ETFs each tracking a DWA Technical Leaders Index. The four existing products in this family have collectively accumulated about $2.7 billion in assets under management.

This has encouraged PowerShares to change the exposure profile for a handful of products in its line-up. Now, nine U.S. equity ETFs are undergoing an index change from Intellidex Indices - owned and calculated by NYSE Euronext - to a family of DWA Technical Leaders Indexes, which is developed and calculated by Dorsey Wright & Associates (DWA).

In addition, these ETFs are now trading with a new name but the same old symbol. Below, we have highlighted the new name and index of these ETFs for investors seeking a new play in terms of relative strength investing (see: all the ETF Categories here ):

SymbolOld Fund NameNew Fund NameNew Index
PYZPowerShares Dynamic Basic Materials Sector PortfolioPowerShares DWA Basic Materials Momentum PortfolioDWA Basic Materials Technical Leaders Index
PEZPowerShares Dynamic Consumer Discretionary Sector PortfolioPowerShares DWA Consumer Cyclicals Momentum PortfolioDWA Consumer Cyclicals Technical Leaders Index
PSLPowerShares Dynamic Consumer Staples Sector PortfolioPowerShares DWA Consumer Staples Momentum PortfolioDWA Consumer Staples Technical Leaders Index
PXIPowerShares Dynamic Energy Sector PortfolioPowerShares DWA Energy Momentum PortfolioDWA Energy Technical Leaders Index
PFIPowerShares Dynamic Financial Sector PortfolioPowerShares DWA Financial Momentum PortfolioDWA Financials Technical Leaders Index
PTHPowerShares Dynamic Healthcare Sector PortfolioPowerShares DWA Healthcare Momentum PortfolioDWA Healthcare Technical Leaders Index
PRNPowerShares Dynamic Industrials Sector PortfolioPowerShares DWA Industrials Momentum PortfolioDWA Industrials Technical Leaders Index
PTFPowerShares Dynamic Technology Sector PortfolioPowerShares DWA Technology Momentum PortfolioDWA Technology Technical Leaders Index
PUIPowerShares Dynamic Utilities PortfolioPowerShares DWA Utilities Momentum PortfolioDWA Utilities Technical Leaders Index

The new portfolio is based on momentum strategies as measured by Dorsey Wright's definition of relative strength characteristics. This strategy takes into account the performance of each individual stock in the benchmark rather than the whole index (read: iShares Files for Momentum-Based ETF ).

Stocks with high relative strength scores (strong momentum) are given higher weights in the index while those with low relative strength scores (weak momentum) are underweighted. This strategy results in a small basket of 30 stocks having positive relative strength characteristics for all the nine ETFs compared with 60 stocks when tracking the Intellidex Indexes. Stocks are selected from a universe of roughly 3,000 stocks in respective sectors, in which the fund belongs.

Bottom Line

There seems to be a huge difference between the old and new benchmarks as the number of holdings for each fund is reduced in half. The ETFs will now have only the highest momentum stocks in their portfolio (read: 3 Sector ETFs Braving the Market Slump ).

The index change for all the nine ETFs seems beneficial in terms of asset gainers as well as performance if we go by history. This is because PowerShares DWA Momentum suite of ETFs has outperformed their benchmarks over the past few years. As such, the funds shifting to this family could emerge winners for PowerShares in the increasingly competitive ETF market.

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PWRSH-DW CON CY (PEZ): ETF Research Reports

PWRSH-DW FIN ST (PFI): ETF Research Reports

PWRSH-DW IND MO (PRN): ETF Research Reports

PWRSH-DW CON ST (PSL): ETF Research Reports

PWRSH-DW HLT MO (PTH): ETF Research Reports

PWRSH-DW UTL MO (PUI): ETF Research Reports

PWRSH-DW EGY MO (PXI): ETF Research Reports

PWRSH-DW BAS MT (PYZ): ETF Research Reports

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Zacks Investment Research

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , ETFs

Referenced Stocks: DWA , PEZ , PFI , PRN , PSL



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