Performance Analysis of PTH, a Smart Beta Fund
Sectoral plus momentum fund
The PowerShares DWA Healthcare Momentum ETF (PTH) is a sectoral fund that seeks to track investment results of the Dorsey Wright Healthcare Technical Leaders Index. The index selects stocks only from the US healthcare sector based on momentum.
PTH has a maximum allocation to the biotechnology sector. Its underlying index consists of 30 healthcare stocks that have relatively high momentum. The momentum of each stock is measured by its benchmark or peers. The index provider selects these common healthcare stocks from approximately 2,000 of the largest constituents by market capitalization within the NASDAQ US Benchmark Index. PTH has an expense ratio of 0.60%.
PTH rose by 5.8% from October 27–November 2, 2015. Other healthcare or biotech funds such as the PowerShares Dynamic Biotechnology & Genome ETF (PBE) and the PowerShares Dynamic Pharmaceuticals ETF (PJP) have also performed well, with returns of 3.4% and 4.1%, respectively, for the same period.
The healthcare sector has outperformed other sectors due to significant earnings reports for the third quarter and some lucrative merger deals of large-cap healthcare firms such as Pfizer (PFE) and Allergan (AGN). PTH has outperformed PJP and PBE.
Significant healthcare earnings
The healthcare sector has outperformed due to its strong earnings reports. You can see in the above graph that PTH is in a rising trend after its 52-week low in mid-October. Although PTH is a sectoral fund, it’s relatively less risky than PBE and PJP, since PTH is a combination of the healthcare and biotech sectors, in effect a combination of PBE and PJP.
PTH’s top five holdings are Radius Health (RDUS), Regeneron Pharmaceuticals (REGN), Anacor Pharmaceuticals (ANAC), DexCom (DXCM), and Allergan (AGN).
Browse this series on Market Realist: