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4 Alpha-Seeking ETFs To Add To Your Watch List

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4 Alpha-Seeking ETFs To Add To Your Watch List

Generating alpha, or excess returns above a benchmark, is no easy task considering the level of consistency needed to prove a unique investment has merit.

Most ETF investors have flocked to well-known benchmarks, such as the SPDR S&P 500 ETF Trust (NYSE: SPY), as core equity holdings in their portfolios. However, there are several strong fundamental or “smart beta” contenders that deserve a place on watch lists as well.

PowerShares Buyback Achievers Portfolio

PowerShares Buyback Achievers Fund (ETF) (NYSE: PKW) is based on the NASDAQ U.S. BuyBack Achievers Index, which selects U.S.-listed stocks that are reducing their share float by at least 5 percent in the trailing 12 months.

This ETF currently has $2.7 billion in total assets, 214 holdings and an expense ratio of 0.68 percent.

The PKW portfolio is dominated by consumer discretionary and technology names such as Apple Inc. (NASDAQ: AAPL) and Home Depot Inc (NYSE: HD). In addition, the underlying holdings are spread out among primarily large- and mid-cap companies.

Over the last 12 months, PKW has returned 18.01 percent.

Related Link: Consumer Discretionary ETFs Receive Earnings Season Boost

First Trust Dorsey Wright Focus 5 ETF

First Trust Exchange Traded Fund VI (NASDAQ: FV) incorporates a unique take on momentum by selecting five underlying First Trust sector or industry-based ETFs with the greatest potential for outperformance. The index is constructed using a relative strength screening methodology to measure momentum across the entire market spectrum.

The top five sectors are then selected and equal weighted according to index criteria.The current portfolio includes: biotechnology, healthcare, consumer staples, Internet and consumer discretionary stocks.

FV has $1.7 billion in total assets and charges a management fee of 0.30 percent. Over the last 10 months (since inception), it has returned 24.96 percent.

Related Link: Utility, Russia And Mid-Cap ETFs To Watch This Week

PowerShares DWA Momentum Portfolio

PowerShares DWA Technical Ldrs Pf (ETF) (NYSE: PDP) is composed of 100 U.S.-listed stocks from a universe of 1,000 total companies with the highest relative performance among their peer groups. The end result is a diversified portfolio of publicly-traded companies across multiple sectors.

The PDP portfolio is made up exclusively of large- and mid-cap companies, with a much different asset allocation than a traditional market-cap weighted index. This ETF has $1.66 billion in total assets and charges an expense ratio of 0.65 percent.

Over the last 12 months, PDP has returned 14.85 percent.

Market Vectors Morningstar Wide Moat ETF

Market Vectors ETF Trust (NYSE: MOAT) is a concentrated mix of just 20 equal-weighted companies that Morningstar has identified as having a unique competitive advantage in their industry. This ETF also favors undervalued stocks, according to a proprietary valuation method implemented by the equity research team responsible for maintaining this index.

Holdings include well-known companies such as Amazon.com, Inc. (NASDAQ: AMZN) and General Electric Company (NYSE: GE). MOAT has over $900 million in total assets and charges an expense ratio of 0.49 percent.

Over the last 12 months, MOAT has returned 7.56 percent.

 

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