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4 Large Cap ETFs Leading the Current Market Rally

The U.S. stock market extended its multi-year record rally this week. The S&P 500 enjoyed the consecutive fifth day of gains, the longest rally since June, and hit an all-time high for the 40th time this year, compared to 45 times in 2013. On the other hand, the Dow Jones industrial average climbed for the sixth session in a row.

The recent rally was sparked off by healthy third-quarter earnings, continued job growth, higher-than-expected U.S. GDP growth numbers, improving business conditions, renewed optimism in housing recovery and some upbeat economic indicators. Additionally, low commodity prices, low interest rates, as well as improving sentiments across the globe supported the strength.

This is especially true as Bank of Japan announced a surprise expansion to its already massive monetary stimulus program to fight deflation risks in the economy while European Central Bank gave hints of more stimulus measures to prop up the continent’s ailing economy anytime soon. China stocks are also surging on the back of the approval of the Shanghai-Hong Kong Stock trading link that would boost trading in the Chinese market (read: Japan Hedged ETFs in Focus after BOJ Action).

Moreover, strong momentum, positive market breadth, and seasonality are driving the stock market higher. Given this, there have been winners in every corner of the space over the past one week and several ETFs have easily crushed the broad market funds (SPY up 1.52% and DIA up 1.48%).

Below, we have highlighted four ETFs that have been the star performers in the same time period and are leading the current market rally (see: all the Large Cap ETFs here).

Market Vectors Morningstar Wide Moat ETF (MOAT)

This fund provides an equal weighted exposure to 21 most attractively valued securities having sustainable competitive advantages by tracking the Morningstar Wide Moat Focus Index. Each security holds around 5% share. The product is also spread across various segments with the top four sectors – information technology, energy, consumer staples and industrials – accounting for double-digit exposure.

The fund has amassed $932.8 million in its asset base while trades in good volume of more than 145,000 shares. Expense ratio came in at 0.49%. MOAT added 2.15% over the last five trading sessions (read: Best ETF Strategies for the Fourth Quarter).

WisdomTree LargeCap Value Fund (EZY)

The fund follows WisdomTree LargeCap Value Index and targets the value segment of the large cap market. Holding 300 stocks in its basket, the product is pretty well spread out across number of securities with each holding less than 4.4% of assets.

In terms of sector holdings, financials accounts for one-fourth of the portfolio, followed by industrials (15.3), consumer discretionary (13%) and healthcare (12.4%). The product has amassed $28.4 million in its asset base while charges 38 bps in annual fees and expenses. Volume is paltry at under 2,000 shares. The fund gained about 1.94% in the same period and has a Zacks ETF Rank of 3 or ‘Hold’ rating with a Medium risk outlook (read: 3 Ultra Cheap Value ETFs for Long Term Outperformance).

First Trust Large Cap Core AlphaDEX Fund (FEX)

The fund follows an AlphaDEX methodology and ranks stocks in the space by various growth and value factors, eliminating the bottom ranked 25% of the stocks. This approach results in a basket of 377 stocks that are well spread out across each security with none holding more than 0.52% of assets. Sector wise, the product is highly diversified with consumer discretionary, information technology and industrials making up for the top three sectors.

FEX is rich in AUM of $1.5 billion and sees good volume of around 210,000 shares a day. It charges 64 bps in annual fees and has gained about 1.9% over the past week. The fund has a Zacks ETF Rank of 4 or ‘Sell’ rating with a Medium risk outlook.

PowerShares Dynamic Large Cap Growth Portfolio (PWB)

This ETF provides pure exposure to the large cap growth segment of the broad U.S. equity market by tracking the Dynamic Large Cap Growth Intellidex Index. The fund is widely diversified across 50 securities as none of these makes up for more than 3.9% of total assets. It has accumulated around $284.3 million in AUM and charges 58 bps in fees per year (3 Growth ETFs to Buy on Large Cap Surge).

From a sector look, the ETF is skewed toward information technology and consumer discretionary with 23.6% and 22% share, respectively, while healthcare (14.5%) and industrials (11.1%) round off to the next two spots. The product added 1.9% in the same period and has a Zacks ETF Rank of 3 with a Medium risk outlook.









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