A Comparative Analysis of PTH and DWAQ


Nov. 8 2015, Updated 10:07 a.m. ET

The PTH-DWAQ connection

The PowerShares DWA Healthcare Momentum ETF (PTH) is a smart beta fund that tracks the investment results of the Dorsey Wright Healthcare Technical Leaders Index. Healthcare stocks are a combination of the pharmaceutical and biotechnology sectors. It’s well known that the PowerShares DWA NASDAQ Momentum ETF (DWAQ) includes the majority of the healthcare stocks issued in the United States.

As you can see in the graph below, PTH and DWAQ have followed similar trends in 2015. PTH has a higher beta than DWAQ because it’s a pure sectoral equity fund, and its trend movement is more significant than DWAQ’s.

Supernus Pharmaceuticals (SUPN), Sucampo Pharmaceuticals (SCMP), Radius Health (RDUS), and Incyte (INCY) are some of the common stocks in both PTH and DWAQ.

Article continues below advertisement

Momentum is a major factor for stock selection

PTH selects stocks by the momentum they exhibit. Momentum stocks are more aggressive and riskier than traditional stocks. They tend to give big gains to investors during rising markets but are equally loss-making during falling markets. DWAQ, on the other hand, is a market capitalization-weighted index.


Smart beta funds are a hybrid of active as well as passive management funds. Biotechnology stocks are risky, and pharmaceuticals stocks have performed well over the years but are inconsistent. Nowadays, analysts consider the momentum of a stock to determine the future price movement. It shows the speed at which a stock may rise or tumble in the market.

Using a momentum strategy for stock selection is beneficial, as stocks with high momentum are closest to a leading indicator. They observe market data faster than other stocks and thus are risky to deal.


More From Market Realist

    • CONNECT with Market Realist
    • Link to Facebook
    • Link to Twitter
    • Link to Instagram
    • Link to Email Subscribe
    Market Realist Logo
    Do Not Sell My Personal Information

    © Copyright 2021 Market Realist. Market Realist is a registered trademark. All Rights Reserved. People may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.