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PowerShares Fund Screens Quality Holdings for You

Fans of baseball know there are two main ways to evaluate team and individual performance: the old-school “eyeball test” method and the newer practice of statistical analytics, popularized in the book (and later the film) “Moneyball.”

An analogous distinction can be drawn between ordinary exchange-traded funds (ETFs) and so-called “smart beta” ETFs. A typical ETF weights its holdings based on market capitalization, while a smart beta fund is weighted according to less visible, though still important, criteria. An example of a smart beta fund that uses the most critically important data to paint a picture of overall quality is PowerShares FTSE RAFI US 1000 ETF (PRF).

PRF’s performance matches that of an index composed of approximately 1,000 stocks screened for quality by Research Affiliates, based on four fundamental measures: book value, cash flow, sales and dividends.

Read more about this quality-focused smart beta fund at Eagle Daily Investor.

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A typical ETF weights its holdings based on market capitalization, while a smart beta fund is weighted according to less visible, though still important, criteria.

archive

PowerShares Fund Screens Quality Holdings for You

A typical ETF weights its holdings based on market capitalization, while a smart beta fund is weighted according to less visible, though still important, criteria.

Fans of baseball know there are two main ways to evaluate team and individual performance: the old-school ??eyeball test? method and the newer practice of statistical analytics, popularized in the book (and later the film) ??Moneyball.?

An analogous distinction can be drawn between ordinary exchange-traded funds (ETFs) and so-called ??smart beta? ETFs. A typical ETF weights its holdings based on market capitalization, while a smart beta fund is weighted according to less visible, though still important, criteria. An example of a smart beta fund that uses the most critically important data to paint a picture of overall quality is PowerShares FTSE RAFI US 1000 ETF (PRF).

PRF??s performance matches that of an index composed of approximately 1,000 stocks screened for quality by Research Affiliates, based on four fundamental measures: book value, cash flow, sales and dividends.

Read more about this quality-focused smart beta fund at Eagle Daily Investor.

Newsletter Signup.

Sign up to the Human Events newsletter

Written By

Doug Fabian is the editor of Successful Investing and High Monthly Income, and is the host of the syndicated radio show, "Doug Fabian's Wealth Strategies." Taking over the reigns from his dad, Dick Fabian, back in 1992, Doug has continued to uphold the reputation of the newsletter as the #1 risk-adjusted market timer as ranked by Hulbert??s Investment Digest. For more than 30 years, Successful Investing (formerly the Telephone Switch Newsletter) has produced double-digit annual gains. Doug has become known for his expert knowledge and timely use of innovative tools like Exchange Traded Funds, bear funds and Enhanced Index funds to profit in any market climate.

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