The third quarter ended on a strong note, as markets finished the period broadly higher. However, a surprise ‘No Taper’ announcement from Bernanke & company and major concerns over the first government shutdown in seventeen years (not to mention the debt ceiling) look to make the next few weeks a bit more volatile.
Investor apprehensions about the government shutdown have shifted the markets, and now many are in search of safer avenues to make profits under this uncertain situation.
Such an environment suggests earnings will be a big focus and the well-performing companies on this front will be the main drivers for the broader markets going forward.
Given this broad based weakness, investors shouldn’t be surprised to note that ETFs of a variety of cap levels have been under pressure lately. In fact, large caps which have been playing their dominant role for long seem to have lost steam.
At this time, investors could look for mid-cap ETFs which can offer the best of both worlds, allowing for both growth and stability in many portfolios (Read: Mid Cap ETF Investing 101).
Given this backdrop, a focus on mid-caps in Q3 earnings could prove to be beneficial, and this can easily be done by looking at the Zacks ETF Rank.
About the Zacks ETF Rank
The Zacks ETF Rank provides a recommendation for the ETF in the context of our outlook for the underlying industry, sector, and style box or asset class. Our proprietary methodology also takes into account the risk preferences of investors. ETFs are ranked on a scale of 1 (Strong Buy) to 5 (Strong Sell) while these also receive one of the three risk ratings, namely, Low, Medium or High.
The aim of our models is to select the best ETF within each risk category. We assign each ETF one of the five ranks within each risk bucket. Thus, the Zacks ETF Rank reflects the expected return of an ETF relative to other products with a similar level of risk.
For investors seeking to apply this methodology to their portfolio in the mid-cap segment, we have taken a closer look at the top ranked PXMV. This ETF, has a Zacks ETF Rank of 1 or ‘Strong Buy’, is detailed below.
PXMV in Focus
Launched in March 2005, PowerShares Fundamental Pure Mid Value (NYSEARCA:PXMV) is an actively managed fund designed to track the performance of the RAFI Fundamental Mid Value Index. The fund generally will invest at least 90% of its total assets in the component securities that comprise the benchmark.