One Industrial ETF To Consider

industry2Mitchell P. Corwin wrote an article for Morningstar focusing on industrial ETFs, and found that as Industrials remain weak, one ETF might be worth looking at prior to their recovery.

Mitchell writes, “While we continue to seek higher beta industrials ETFs, we have uncovered an interesting choice that may be a bit more appealing than the market-cap-weighted ETFs:  PowerShares Dynamic Industrials (PRN). Since its October 2006 inception, PRN has outperformed its ETF peers in both rising and falling markets. Compared with XLI, PRN was up nearly 250 basis points greater in 2007 and lost nearly 250 basis points less in 2008. The outperformance has continued thus far in 2009.”

“While the absence of GE in PRN’s portfolio alone was beneficial to the fund’s performance, its success was more a reflection of stock selection and a few other likely factors, such as timeliness (stocks are selected by its underlying index quarterly, utilizing a 25-factor proprietary model). In addition, PRN’s risk metrics indicate that it managed to outperform at similar levels of risk. In its short existence, this fund has not only delivered better returns but better risk-adjusted returns.”

For the full Morningstar article click: HERE


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