5 Market-Based ETFs Your Broker Forgot to Mention (HDIV, OFF, PDP)
With nearly 1,500 exchange-traded products on the market today, investors have plenty of options when it comes to finding market-based funds. Market-based funds do not track a specific sector or country. Rather these ETFs, also known as broader market funds, are designed to offer exposure to a large slice of or the entire U.S. equity market.
Those are all fine funds that do exactly what the names imply: Grant investors exposure to a broad swath of U.S. equities. However, investors that are willing to look off the beaten path can be rewarded with more obscure broader market ETFs. Here are a few that performing well that brokers probably have not been touting much.
ETRACS Fisher-Gartman Risk Off ETN (NYSE: OFF) Plenty of new ETFs and ETNs fall victim to a "right idea, wrong time" scenario. That is to say the premise behind the new ETF is good, but the market environment when that fund debuts is not conducive to success. That has not been the case for the ETRACS Fisher-Gartman Risk Off ETN.
Fisher-Gartman Off debuted in November, and while investors were quite ebullient in late 2011 and early 2012, they have remained pensive for most of OFF's short lifespan. Fisher Gartman Off is a long/short product with value-based target weightings for the long and short positions of 150 percent and 50 percent, respectively. The index is rebalanced quarterly to return the weightings to these target levels, according to the ETRACS Web site.
As of Thursday, Fisher Gartman Offwas more short than long with short positions in familiar ETFs such as the iShares MSCI Brazil Index Fund (NYSE: EWZ) and the Market Vectors Russia ETF (NYSE: RSX), among others.
With an annual expense ratio of 1.15 percent accrued on a daily basis, OFF is not cheap. However, it cannot be ignored that OFF has jumped 6.6 percent in the past 90 days.
PowerShares DWA Technical Leaders Portfolio (NYSE: PDP) The PowerShares DWA Technical Leaders Portfolio is based on the Dorsey Wright Technical Leaders Index. PDP is home to just 100 stocks, a total that is somewhat small for a market-based ETF, but what is not small about this ETF is the returns. Year-to-date, PDP is up 11.4 percent compared to 7.9 percent for the S&P 500.
PDP focuses primarily on large-cap and mid-cap names and consumer discretionary names dominate the fund's sector weight with an allocation of 31.1 percent. Top holdings include American Tower (NYSE: AMT), Apple (NASDAQ: AAPL) and Priceline.com (NASDQ: PCLN). PDP charges 0.7 percent and has almost $554 million in AUM.
Guggenheim Defensive Equity ETF (NYSE: DEF) Like PDP, the Guggenheim Defensive Equity ETF is home to just 100 stocks, however the fund is true to the defensive nature it claims to have. Utilities and consumer staples names account for over 45 percent of DEF's weight and those have been fine places to hideout in recent months.
Guggenheim Defensive Equity, which has a beta of 0.58, has lagged the S&P 500 year-to-date, but as volatility and anxiety have increased in recent months, Guggenheim Defensive Equity has beaten SPY over the past 30 and 90 days. No stock receives a weight larger than 1.22 percent in DEF. Top holdings include Wal-Mart (NYSE: WMT), Verizon (NYSE: VZ) and Merck (NYSE: MRK).
Guggenheim Wilshire 5000 Total Market ETF (NYSE: WFVK) The Wilshire 5000 Total Market ETF will not win any volume contests with average daily turnover of just 850 shares. Nor does the ETF hold 5,000 stocks, its constituency is closer to 1,200. WFVK is small with just $5.9 million in AUM, but it is cheap with an expense ratio of 0.12 percent. The ETF is cap-weighted so Apple is its top holding, Exxon Mobil (NYSE: XOM) is number two, etc.
Russell High Dividend Yield ETF (NYSE: HDIV) Another new dividend ETF, the Russell High Dividend Yield ETF came to market in March and has thus far hauled in $15.4 million in AUM. Home to 75 stocks, HDIV has a 30-day SEC yield of almost 3.7 percent.
Russell High Dividend isn't the biggest or most heavily traded dividend ETF on the block, but it must be noted that over the past three months, the Russell fund has handily outperformed the Vanguard Dividend Appreciation ETF (NYSE: VIG) and the SPDR S&P Dividend ETF (NYSE: SDY).
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