For investors seeking momentum, PowerShares S&P 500 Downside Hedged Portfolio PHDG is probably on radar now. The fund just hit a 52-week high and is up 21.4% from its 52-week low price of $24.65/share.
But are more gains in store for this ETF? Let's take a quick look at the fund and the near-term outlook on it to get a better idea on where it might be headed:
PHDG in Focus
This actively managed fund seeks to deliver positive returns in rising or falling markets that are uncorrelated to broad equity or fixed-income market returns. It tries to follow the S&P 500 Dynamic VEQTOR Index, which provides broad equity market exposure with an implied volatility hedge by dynamically allocating between different asset classes: equity, volatility and cash. The S&P 500 Total Return Index represents the equity component while the S&P 500 VIX Short-Term Futures Index represents the volatility component. The non-equity (volatility + cash) portion makes up for one-fourth of the portfolio while the rest goes to equity. The product charges 39 bps in annual fees from investors (see: all the Large Cap ETFs here ).
Why the Move?
The volatility hedged corner of the ETF space has been an area to watch lately given the spike in volatility. The CBOE Volatility Index (VIX), also known as the fear gauge, hit a one-year high last week, making wild swings in equity markets amid bullish fundamentals backed by strong corporate earnings, higher consumer spending, rising consumer confidence as well as a new tax law enacted by President Donald Trump. Against such a backdrop, volatility hedged ETFs have the potential to stand out and outperform the simple vanilla funds.
More Gains Ahead?
It seems that PHDG might remain strong given a higher weighted alpha of 24.80% despite a higher 20-day volatility of 21.82% . As a result, there is definitely still some promise for investors who want to ride on this surging ETF a little further.
Want key ETF info delivered straight to your inbox?
Zacks' free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.