Fed Minutes Boost Trading in These ETFs

Zacks

Investors heaved a sigh of relief yesterday following the minutes from the Fed meeting held last month. The minutes revealed that the Fed is in no hurry to raise interest rates and has maintained its accommodative stance.

The minutes also suggest that the Fed is on track to pull the world's largest economy out of an era of loose monetary policy and plans to end its monthly asset purchases in October. This is especially true, as the U.S. economy has regained momentum after the steep decline of 2.9% in GDP growth in the first quarter. The officials expect the economy to continue to strengthen at healthy growth rates for the rest of this year.

Strongest growth in the job market last month since the technology boom in late 1990, encouraging signs of improvement in the housing market and increasing consumer confidence added to the optimism. Further, the unemployment rate dropped to the lowest level in almost six years to 6.1% in June, suggesting increased confidence in the 5-year old U.S. recovery (read: US Economy Warms Up After Frigid Winter: 3 ETFs to Watch).

Despite the improving economy, the Fed is unlikely to raise interest rates until the second half of the next year. According to it, inflation has definitely picked up significantly in recent months but is still below the Fed's 2% target. The Fed continued its commitment to keep the rates at lower levels for a considerable period of time even after QE wrap up. This would further put downward pressure on dollar in the coming days.

Although the Fed minutes did not deliver anything new, the U.S. stocks rose in Wednesday trading session snapping the two-day slide, as investors are more confident that the 5-year bull market has room for further upside in the coming days.

With that being said, several ETFs have garnered special interest from investors in terms of volume (the number of shares traded on a particular day). Below, we have highlighted three ETFs that have seen an incredible rise in volumes on the day, as per finviz.com.
 
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 49 securities as none of these makes up for more than 3.7% of total assets (read: 2 Top Ranked Large Cap Growth ETFs in Focus).

From a sector look, the ETF is skewed toward consumer discretionary at 28.35% while industrials (15.65%) and information technology (12.62%) round off to the top three spots. The product has accumulated around $281.8 million in AUM and charges 59 bps in fees per year. The fund added 0.70% in Wednesday session with elevated volumes of more than 10 times on a normal day. PWB has a Zacks ETF Rank of 3 or ‘Hold’ with a ‘Medium’ risk outlook.

PowerShares Dynamic Networking Portfolio (PXQ)

This product targets the networking segment of the broad U.S. technology sector. It follows the Dynamic Networking Intellidex Index, holding 30 securities in its basket. The fund is pretty spread across each component as each security account for less than 5.2% share in the basket. However, it has a definite tilt toward small caps accounting for 55% while mid and large caps make up for 25% and 19% of the portfolio, respectively (see: all the Technology ETFs here).

In terms of industrial exposure, communication equipment dominates the fund portfolio with more than half of the portfolio, followed by 30% in software and programing. The ETF is unpopular with AUM of $29 million and expense ratio of 0.64%. Though the fund is illiquid with average daily volume of under 7,000 shares, volume expanded 9.57 times in yesterday trading. The ETF was up just 1.25% on the day and has a Zacks ETF Rank of 3 with a ‘High’ risk outlook.

iShares Russell Top 200 Value ETF (IWX)

This ETF tracks the Russell Top 200 Value Index and offers pure exposure to the large cap value segment of the U.S. equity market. Holding 125 stocks in its basket, the fund is concentrated on its top firm, Exxon Mobil (XOM) at 6.34% and the top sector, financials at 27%. Other securities and sectors make up for a nice mix in the portfolio (read: 3 Top Ranked Value ETFs to Buy Now).

The product has accumulated around $200.6 million in its asset base and charges 0.20% in expense ratio. The fund added 0.33% in the last trading session on solid volumes of more than 8.5 times a normal day. IWX has a Zacks ETF Rank of 2 or ‘Buy’ with a ‘Medium’ risk outlook.

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