Scalper1 News
Summary Consumer staples stocks have been performing this year. Focus on the outperforming PowerShares DWA Consumer Staples Momentum Portfolio. How the PowerShares Consumer Staples ETF stacks up against the competition. By Todd Shriber & Tom Lydon Although Treasury yields have been surging in anticipation of the Federal Reserve raising interest rates later this year, 2015 has thus far been a decent year for consumer staples exchange traded funds. The Vanguard Consumer Staples ETF (NYSEARCA: VDC ) is up 4.1% year-to-date, which is well ahead of the 2.9% returned by the S&P 500. However, VDC’s gain is less than half that of the PowerShares DWA Consumer Staples Momentum Portfolio ETF (NYSEARCA: PSL ) . So strong has PSL been this year; it was one of just 12 ETFs hitting all-time highs in Tuesday’s lousy tape. PSL’s strong 2015 showing is proof positive of several things. First, momentum and growth have been trumping value this year. Second, the smart or strategic beta phenomenon, one that is often derided on the basis of nomenclature works at the sector level, not just with diversified broad market ETFs. PSL was one of the 10 PowerShares ETFs that were transitioned to momentum indices from Dorsey Wright & Associates in February 2014. PSL now tracks the Dorsey Wright Consumer Staples Technical Leaders Index, an index “designed to identify companies that are showing relative strength (momentum),” according to PowerShares . PSL has other advantages. Consumer staples have been derided as vulnerable to a strong dollar , but that thesis is most applicable to the sector’s large- and mega-cap names. Think Coca-Cola (NYSE: KO ), Procter & Gamble (NYSE: PG ) and related fare. PSL allocates just 23% of its weight to large caps, roughly the same amount it devotes to small caps, which can endure bouts of dollar strength. Following the Heinz-Kraft merger announcement in March, we noted PSL is home to several credible takeover targets, Hain Celestial (NASDAQ: HAIN ), Monster Beverage (NASDAQ: MNST ), and WhiteWave Foods (NYSE: WWAV ). Those stocks combine for nearly 11% of the ETF’s weight. For its part, PSL is not a stranger to food and beverage M&A. The ETF earned some time in the limelight last year when Tyson Foods (NYSE: TSN ) and Pilgrim’s Pride (NASDAQ: PPC ) fought for Hillshire Brands. Other PSL holdings that have been previously mentioned as potential targets include Constellation Brands (NYSE: STZ ) and Dr Pepper Snapple (NYSE: DPS ), a combined 7.4% of the ETF’s weight. Advisors and investors have been embracing PSL this year. Now home to over $132 million in assets under management, $60.6 million of that has come into the ETF just this year, according to PowerShares data . PowerShares DWA Consumer Staples Momentum Portfolio ETF (click to enlarge) Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. (More…) I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Scalper1 News
Scalper1 News