Smart Beta ETFs That Stood Out Amid Market Volatility

By | March 9, 2016

Scalper1 News

The ‘smart beta’ rage has lately taken the charge of the ETF world. Simply put, the days of plain vanilla ETFs or market-cap weighted ETFs are gone and products with several winning attributes are coming on stream. By now, investors are quite familiar with what the smart-beta concept actually is. As the name suggests, this approach calls for a strategic procedure rather than a plain vanilla market-cap oriented method of portfolio construction. Smart beta funds normally follow the passive investment strategy but with a slight twist which enables it to generate market-beating returns. Many people call it an enhanced investing strategy. A survey conducted by Create-Research shows that smart beta ETFs make up for around 18% of the U.S. ETF market. Another survey pursued by FTSE Russell reveals that 68% of financial advisors are eyeing smart beta ETFs while 70% are focusing on multiple strategic beta techniques. Investors dream of sweeping off the market and scooping up capital gains through this approach. The love for smart beta products was best reflected when renowned investment house Goldman Sachs recently forayed into the ETF industry with a host of smart-beta products (read: Can Goldman Dominate the Smart Beta ETF Industry? ). Below we have highlighted five ‘Smart Beta’ options that outperformed the broader U.S. market ETF SPDR S&P 500 ETF (NYSEARCA: SPY ), which has lost about 1.7% so far this year (as of March 4, 2016) (read: How You Can Beat the Market with Dividend Aristocrat ETFs ). PowerShares DWA Utilities Momentum ETF (NYSEARCA: PUI ) As bond yields fell on a flight to safety triggered off by global growth concerns and oil price declines at the initial part of the year, rate-sensitive sectors like utilities soared. The sector is known for its relatively high dividend payout and defensive but capital-intensive nature. As a result, a low-yield environment is a winning backdrop for it. While all utilities ETFs performed well in the stormy first two months of 2016, PUI – comprising utility companies that are showing relative strength – fared better. PUI is up 8.2% in the year-to-date frame (as of March 4, 2016). PowerShares S&P 500 High Dividend Low Volatility ETF (NYSEARCA: SPHD ) The drive for high current income along with focus on low volatile stocks has made this high dividend low volatility ETF a winner this year. The underlying index of the fund looks to track the performance of 50 securities selected from the S&P 500 Index that have historically provided high dividend yields with lower volatility. The fund yields 3.47% annually and is up 7.1% so far this year (as of March 4, 2016) (read: 3 Safe High Dividend ETFs to Beat the Volatile Market ). ALPS Emerging Sector Dividend Dogs ETF (NYSEARCA: EDOG ) The fund benefited from the return of the emerging markets and investors’ lure for dividends. The underlying index of the fund picks five stocks in each of the 10 sectors that make up the S-Network Emerging Markets which offer the highest dividend yields. The fund is equal-weighted in nature. The fund yields 4.48% annually and is up 12.3% so far this year (as of March 4, 2016) (read: Emerging Markets Back On Track: 5 Outperforming ETFs ). IQ Global Resources ETF (NYSEARCA: GRES ) Since commodities have enjoyed a phenomenal run in the year-to-date frame, this fund has found a place in the top-performers’ list. The IQ Global Resources ETF focuses on momentum and valuation factors to identify global companies that function in commodity-specific market segments and whose equity securities trade in developed markets, including the U.S. These segments include the major commodity sectors, plus Timber, Water and Coal. The fund has added 11.3% so far this year (as of March 4, 2016). The fund yields 2.60% annually. PowerShares S&P Mid-Cap Low Volatility ETF (NYSEARCA: XMLV ) As volatility spiked to start 2016, this mid-cap low volatility fund gained considerable investor attention. The fund measures the performance of 80 of the least volatile stocks from the S&P MidCap 400 Index over the past 12 months. XMLV is up over 3.4% and yields 1.83% annually. Original Post Scalper1 News

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