PowerShares International Dividend Achievers: Heavy In Financials (ETF: PID)

Roger Nusbaum submits: A reader emailed in asking for a review of PowerShares International Dividend Achievers Fund (PID) since it increased to 60 holdings.

As you might expect, the financial sector has the largest weight by a mile at 44.68%. If you look at the PowerShares site you will see it says 35.53% but for some reason the other category is all of the Canadian banks. I'm not sure why it is presented that way but I think it is safe to include banks in the financial grouping.

Both consumer sectors (discretionary and staples), energy, materials and the telecom sectors are weighted similarly in PID as the S+P 500. Tech and the industrial sectors are very underweight compared to the S+P and the utility sector is very overweight at 9.44% (this is not a surprise either).

As for country weightings, Canada is the largest at 22.06%, then the UK at 15.62, Ireland with 6.74% and several others around 5%, including Australia.

As you look at the chart you can see that PID does correlate closely to Canada (ETF: EWC), the UK (ETF: EWU) and Australia (ETF: EWA):

PID's correlation to these places is not a shock but it is worth knowing.

That it is so heavy in financials is not, in and of itself a bad thing. But problems can arise if PID is blended together with several other products that own a lot of financial stocks. That sector makes up 20.8% of the S+P 500.

With where we are in the economic cycle I would not want to be overweight the sector but this fund shows how easy it is to become overweight. If being underweight turns out to be correct, a portfolio that is overweight because of ETF selection will lag and the dividend may not be enough to make up for the lag.