Quant Strategy Growth/Value ETFs

Quant Strategy Growth/Value ETFs List
(click on symbol for data and articles)

Claymore Quant Strategy Growth/Value ETFs
Claymore/Robeco Boston Partners Large-Cap Value ETF (CLV)

PowerShares Quant Strategy Growth/Value ETFs
PowerShares Dynamic Aggressive Growth Portfolio ETF (PGZ)
PowerShares Dynamic Deep Value Portfolio ETF (PVM)
PowerShares Dynamic Large Cap Growth Portfolio ETF (PWB)
PowerShares Dynamic Large Cap Value Portfolio ETF (PWV)
PowerShares Dynamic Mid Cap Growth Portfolio ETF (PWJ)
PowerShares Dynamic Mid Cap Value Portfolio ETF (PWP)
PowerShares Dynamic Small Cap Growth Portfolio ETF (PWT)
PowerShares Dynamic Small Cap Value Portfolio ETF (PWY)

What Are They?

• Quant strategy ETFs use rules-based quantitative analysis to pick stocks. The Claymore/Robeco Boston Partners Large-Cap Value ETF, for example, uses a statistical model that ranks stocks based on valuation, positive momentum and favorable business fundamentals.
• The PowerShares ETFs select stocks based on undisclosed valuation criteria. The underlying stock baskets are recalibrated every quarter.
• These ETFs aren't entirely market cap weighted. Within the market cap-defined groups, the stocks are equal weighted, with each large cap stock given a 2.5% weighting and each mid and small cap stock a 1.36% weighting.

Why & How To Use Them

• Use these ETFs instead of regular index growth/value ETFs if you believe that quantitative, rules-based stock selection will outperform a market cap weighted or equal cap weighted index.
• One advantage of using a growth/value split is that it allows you to over-weight value stocks in your portfolio. According to Paul Marsh, "A large body of US-based evidence shows that there has been a higher long-run return, at least over the period from 1926-2000, from investing in value stocks". Note, however, that you could also overweight value stocks by buying a Total Market ETF and then adding a smaller holding in a value ETF.

What to Look Out For

• Compared to broader index ETFs, specialty ETFs such as quant strategy ETFs tend to have higher expense ratios and wider buy-sell spreads (which makes them more costly to purchase and sell).
• The quarterly recalibration of the stock baskets underlying these ETFs leads to higher stock turnover and therefore potentially higher trading costs and lower tax efficiency.

Further Reading

• For more on PowerShares, see Mick Weinstein's PowerShares: Growing Assets But With High Expense Ratios.
• For more on Growth/Value investing, see US Growth and Value ETFs.

This page is part of The Seeking Alpha ETF Selector which sorts ETFs by type, highlights how to use them and what to look out for, and provides links to articles that discuss key issues for investors.