Invesco PowerShares, the Wheaton, Ill.-based firm behind the world’s largest Nasdaq 100 ETF, filed paperwork with U.S. regulators to market an equally weighted small-cap equities ETF that would hone in on companies with the strongest technicals in the U.S. small-cap segment.
The PowerShares DWA SmallCap Technical Leaders Portfolio will track an index created by technical analysis leaders Dorsey Wright. It will invest in some 200 small- cap companies selected from a pool of 2,000, based on Dorsey Wright’s “relative strength” scoring. Components will follow a modified equal weighting and be rebalanced quarterly, the filing said.
The new ETF would be PowerShares’ fourth ETF to tap into Dorsey Wright’s expertise. The PowerShares DWA Technical Leaders Portfolio (PDP - News), which applies the same methodology to the U.S. large-cap segment, was launched back in 2007 and has gathered $543.8 million in assets. The company also has an emerging markets fund and one focused on developed markets that apply the same methodology.
PDP’s underlying Dorsey Wright index has delivered a strong performance relative to other indexes in the space so far this year, climbing 14.1 percent year-to-date while the S'P 500 Growth Index gained 12.2 percent in that period and the S'P 500 Index tagged on 12.5 percent, PowerShares said on its website.
But that performance has not been consistent. Going back 12 months, PDP has only gained 6.7 percent in that period while the S'P 500 Growth Index and the Russell 3000 Growth Index have gained more than 11.8 and 10.1 percent, respectively.
PDP ties nearly two-thirds of the portfolio to growth stocks, the remaining third being tied to value stocks, according to information on PowerShares’ website.
No ticker and fees were disclosed in the new filing.
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