In a risk-on environment, such as the one investors were treated to last year, it is not surprising to see the conservative consumer staples lag a bit.
That is exactly what happened in 2013 as major staples exchange traded funds posted gains in the 26% to 27% range, giver or take a percentage point here and there. The PowerShares Dynamic Food & Beverage Portfolio (PBJ) was better with a gain of nearly 34%. Better still, PBJ is currently showing encouraging technical signs. [2013's Top Consumer Staples ETF]
PBJ “has formed a bullish consolidation just below its all-time high during the past five months,” according to Deron Wagner of Morpheus Trading Group. “The 40-week moving average remains in a clear uptrend, and the 10-week MA has been trending higher as well throughout much of the base.”
PBJ holds 30 stocks that are selected based on price momentum, earnings momentum, quality, management action, and value. In other words, PBJ is a smart beta ETF, a genre of ETFs that hauled in $65.1 billion in new assets last year. [A Record Year for ETF Inflows]
PBJ remains true to the fact that it is not a cap-weighted fund as all three cap spectrums are well represented in the ETF. Small-caps account for a third of PBJ’s weight while large-caps check in at just over 39%. Mid-cap growth and value names combine for 27.5%.
Although PBJ is not a traditional staples ETF in terms of weighting methodology, the fund is still home to many of the staples (and some consumer discretionary) names investors have come to revere. For example, Coca-Cola (KO), General Mills (GIS), PepsiCo (PEP) and Starbucks (SBUX) combine for almost 20% of the ETF’s weight.
PBJ, which has an annual expense ratio of 0.63%, has $230.6 million in assets under management. Nearly $81.1 million of that total has come into the fund over the past year, putting PBJ in the top third among PowerShares in terms of inflows over that time, according to issuer data.
PowerShares Dynamic Food & Beverage Portfolio
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of Coca-Cola.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.