When the smoke clears:
At this time no one knows how long this little correction will last. It may even turn into a full scale blowup. The markets typically don't formerly announce the "all clear" bell as risks abound. Before the smoke clears however, now is the time to make some lists for a second half election year rally. Most of these funds are not household names and some are a tad on the aggressive side. They are mostly non-leveraged and should provide some added horsepower during for an intermediate trend market rebound. Because of their growth bent they will also be a bit more volatile, but with the added potential alpha boost when the market comes roaring back. This list is not intended to be long-term holdings, but for intermediate term (one to three months) market bounce plays in the second half of the year - when market conditions hopefully improve.
1.) PowerShares DWA Technical Leaders Portfolio ETF (NASDAQ:PDP). This ETF began trading in March 2007 with a 3 year trailing return of about 25%. Year to date performance has been a very healthy 11.5%. It's an ETF based on algorithms using technical analysis. It's linked to an equity index called the Dorsey Wright Technical Leaders Index, which is constructed using proprietary technical models that include point and figure charting, relative strength, etc. They update metrics and portfolio every quarter for new buy or sell signals. The fund has a moderate expense ratio of 0.70%. The top holdings include Apple (NASDAQ:AAPL), American Tower Corp. (NYSE:AMT) and the REIT - General Growth Properties (NYSE:GGP).
2.) Guggenheim Raymond James SB-1 Equity ETF (NYSEARCA:RYJ). This somewhat obscure ETF has been a very good performer since its inception in May 2006. Year to date performance is an OK 6.4%, with a trailing three year performance at around 22%. This fund is linked to the performance of an Index called the Raymond James SB-1 Equity Index, which are the top "Strong Buy" picks from Raymond James. The fund holds about 173 securities and has top sector weightings of over 20% each in information technology, financials and energy. Top holdings include BMC Software (NASDAQ:BMC), RailAmerica (NYSE:RA) and Verifone Systems (NYSE:PAY). The fund sports a healthy expense ratio of 0.75%.
3.) First Trust Tech Alphadex ETF (NYSEARCA:FXL). This ETF from First Trust has been around since May 2007 and has some unique features unlike other technology index funds. The fund tracks the StrataQuant Technology AlphaDEX Index. This Index is a quantitative constructed portfolio with proprietary stock selections made from the Russell 1000 using special growth and value metrics and rankings. This Index holds about 88 stocks and is rebalanced and reconstituted on a quarterly basis. The expense ratio is 0.70%. The unique aspect of this fund is when compared to the popular PowerShares (NASDAQ:QQQ) with a 18.7% Apple weighting, this fund's weighting is only about 2%. This large difference is because of its equal weighting of stocks within each quintile rankings. This can of course cause some underperformance during a rip roaring AAPL driven tech trend. On the other hand if you want a tech ETF that is not dominated by one holding, then this fund fits the bill. When Apple someday inevitably cools off its growth trajectory, this tech ETF could avoid some of the drag. Performance year to date is modest, about 4% with three year trailing gains of about 18.5%. The Apple dominated QQQ comparatively has gained about 12.2% and 24% respectively.
4.) UBS ETRACS Fisher-Gartman Risk On ETN (NYSEARCA:ONN). This relatively new and offbeat ETN tracks an Index called The Fisher-Gartman Risk Index. This is a partially leveraged 150% long and 50% short fund. The Index seeks to profit from a "Risk On" market environment. The 35 holdings include either long or short positions in equities, currencies, commodities and sovereign bonds. Lots of moving parts in this one. The expense fees are 0.85% for all this innovation and exposure. The funds performance year to date is a disappointing -1.9%. Because the funds inception was November 30, 2011, it has a very limited history. It's definitely a global macro fund and could do well in a world-wide growth "risk on" environment. The caveat is the portfolio mix will have to be in perfect synch with its unusual mixes. i.e.: dollar down, energy up, metals up, euro up, etc. This potion has worked well the last several years with the China growth story, but going forward the index sponsor may have to make adjustments to the broad recipe.
5.) Guggenheim S&P 500 Pure Growth ETF (NYSEARCA:RPG). This fund which started in March 2006 seeks to be a pure growth style fund. It removes any stocks that overlap with any value style metrics. The fund holds about 131 stocks with this strict pure growth criterion. The Index the fund tracts is aptly called the S&P 500 Pure Growth Index. The fund has a very modest 0.35 expense ratio. Some of the top holdings include Apple, Priceline (NASDAQ:PCLN) and VISA (NYSE:V). The top three sector weightings are consumer discretionary at 24.7%, healthcare at 22.6% and information technology at 21.1%. Year to date performance is about 6.4% with a healthy three year trailing return of around 22.8%. When the smoke clears this fund should provide a little kick to any portfolio.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.
Additional disclosure: Please read the prospectus of all funds mentioned.