Grow Your Portfolio the Intelligent Way

Momentum Fund Speeds into First Place

By Jim Woods

The first half of 2015 has seen markets land relatively flat, with minimal upside to be found in broad market indices. However, just because the U.S. market isn’t offering easy money doesn’t mean it isn’t possible for individual investors to win with the right picks. The top-performing exchange-traded fund (ETF) in the U.S. equity market during the first half of 2015 was PowerShares DWA NASDAQ Momentum Portfolio (DWAQ).

This fund tracks a subsection of the Nasdaq index. First, it separates out the 1,000 Nasdaq stocks with the largest market capitalizations. Then, it uses technical measures to choose from that pool of stocks and find the 100 equities in that group that have the best momentum and relative strength. This rating is based on medium- and long-term price movements. The selected stocks then are purchased by DWAQ. Despite the inclusion of the Nasdaq companies with the largest market capitalizations, DWAQ is considered a mid-cap fund.

Clearly, the fund’s strategy has produced strong results so far this year, as the ETF was up an astonishing 12.33% through the first half of 2015. In this market, that’s very much deserving of the gold medal for the U.S. equity category. As with all funds in the top 10 on this metric, the majority of these gains were produced during Q1. Assets managed for this fund are only $35.62 million, and it features a small yield of 0.07%. The expense ratio for DWAQ is 0.60%.


Top holdings for this fund include Jazz Pharmaceuticals PLC (JAZZ), 3.03%; Gilead Sciences Inc. (GILD), 2.85%; Apple Inc. (AAPL), 2.81%; Starz (STRZA), 2.75%; and Henry Schein Inc. (HSIC), 2.63%. Its top 10 holdings total 24.86% of its assets. DWAQ’s largest sector weightings are healthcare, technology and consumer discretionary.

This fund has proven its mettle in the current investing landscape. If you think its upward streak is likely to continue, PowerShares DWA NASDAQ Momentum Portfolio (DWAQ) might provide the returns you seek.

Watch for my description of the second-ranked U.S. equity fund for the first six months of 2015 in my next column. If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful ETF Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

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