Under the Microscope: PowerShares Dynamic MagniQuant ETF
Tuesday, June 1st, 2010ETF Database submits:
When the ETF industry burst on to the investing scene, the initial wave of growth was driven primarily by equity products that sought to replicate the performance of well-known indexes, including the S&P 500, Dow Jones Industrial Average, and Nasdaq. In recent years cash flows to these “super index” equity ETFs has slowed, but exchange-traded commodity products and fixed income ETFs have picked up the slack. Looking forward, many industry insiders expect actively managed ETFs to drive the next growth spurt, competing more directly with mutual funds for assets of those with a longer time horizon.
Active ETFs have been slow to gain traction, but a sliver of the ETF universe positioned between active and passive is showing signs of catching on. While there are still relatively few ETFs linked to “enhanced” or quantitative indexes, the number has been growing steadily over the past few years as investors have gained comfort with the use of ‘alpha-seeking’ ETFs as a part of their portfolio. One option available to investors seeking to use a quantitative approach is the PowerShares Dynamic MagniQuant ETF (PIQ). The fund tracks the Top 200 Dynamic Intellidex Index, which is designed to identify 200 stocks that have the greatest potential for capital appreciation. The “Intellidex” methodology thoroughly evaluates the investment merit of the 2,000 largest U.S. companies by analyzing numerous unique financial characteristics from four broad financial perspectives: fundamental, valuation, timeliness, and risk (see “Quasi-Active” ETFs Explained).
