8 ETFs That Are Crushing It

July 01, 2013

 

For example, the PowerShares KBW Premium Yield Equity REIT (NYSEArca: KBWY) earned alpha in excess of 17 percent over the broad U.S. real estate market because its refined strategy nixes cap weighting in favor of a dividend-focused strategy.

The strategy is particularly relevant to the world of real estate investing, where dividend yield is often what brings investors to the table in the first place.

KBWY

Other ETFs managed to earn serious alpha by implementing quant-driven strategies.

As a broad market, emerging market small-caps have returned about 11 percent over the past year. but the First Trust Emerging Markets Small Cap AlphaDex ETF (NYSEArca: FEMS) managed to return more than 30 percent. The secret behind its success is a quant-driven strategy that ranks and weights a small basket of stocks based on a variety of growth and value factors.

FEMS

Although the AlphaDex strategy led FEMS to outperformance, the strategy's success is less proven across the broad swath of nearly 40 First Trust ETFs that use some variation of the strategy.

Looking at the big picture, several ETFs have hugely outperformed their broad market by employing a range of tactics and strategies ranging from currency hedging, nuanced weighting strategies, quant-driven factor strategies, or simply by shuffling big-name exposure.

While each strategy has proved successful over the past year, they ought to be evaluated on an individual basis for applicability and relevance moving forward.


At the time this article was written, the author held no positions in the securities mentioned. Contact Spencer Bogart at [email protected] or follow him on twitter @Milton_VonMises.


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