Dorsey Wright momentum solutions

Momentum investing

  • Focuses on buying high and selling higher.
  • Follows the premise that securities that recently have outperformed or underperformed will continue to do so, at least over the short term.
  • Looks to purchase companies that may be poised to experience price strength and avoid/sell companies that display price weakness.

Broad market and sector equity ETFs
PowerShares DWA Momentum ETFs seek to combine the intelligent ETF revolution with the power of momentum.

Rotation solutions with asset class exposure
PowerShares DWA momentum-based rotation strategies offer targeted exposure to the equity and fixed income markets. These strategies are available in one ticket solutions through: DWA Tactical Sector Rotation Portfolio (DWTR) –and– DWA Tactical Multi-Asset Income Portfolio (DWIN).

A global, multi-factor solution incorporating risk mitigation strategies
PowerShares DWA Momentum & Low Volatility Rotation Portfolio (DWLV) combines low volatility and momentum factors for a one ticket solution offering tactical global equity access with risk mitigation potential.

PowerShares Dorsey Wright Equity ETFs

PowerShares by Invesco, a leader in the smart beta1 ETF revolution, was among the first to offer exchange-traded funds utilizing the technical expertise of Dorsey, Wright & Associates, LLC (DWA). The PowerShares DWA Momentum ETFs, based on DWA's index methodology, were the first momentum ETFs available in the US marketplace.

1 Beta is a measure of risk representing how a security is expected to respond to general market movements. Smart beta represents an alternative and selection index based methodology that may outperform a benchmark or reduce portfolio risk or both. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk.


  • DWLV

DWA Momentum & Low Volatility Rotation Portfolio

A tactical global equity portfolio with risk mitigation potential, DWA Momentum & Low Volatility Rotation Portfolio (DWLV) is a smart beta1 fund of funds and the first ETF to track an index powered by DWA's Dynamic Asset Level Investing (DALI) tool. DALI is a proprietary investment tool that provides unbiased, objective data to measure a security's relative performance and a rules-based framework for global and factor allocations.

Key features of DWLV

A tactical global equity portfolio tracking an underlying index that:

  • Combines the low volatility and momentum factors in a one ticket solution
  • Systematically allocates between US and international equity ETFs
  • Provides pure exposure2 to the low volatility factor
  • Identifies meaningful momentum trends through DWA's relative strength3 analysis
  • Offers risk mitigation potential with a US Treasury component that can adjust up to 100%
  • Delivers a multi-factor strategy in the tax-efficient ETF structure4

The index methodology

DWLV tracks the Dorsey Wright® Multi-Factor Global Equity Index5 and uses DALI's relative strength analysis in a two-step process to allocate among eight PowerShares US and international equity ETFs and cash via US Treasury securities. The index can also rotate into 100% US Treasury securities.

Starting universe:

Step 1: Global allocation

Using DALI's relative strength analysis, DWLV's underlying index ranks US equities, international equities and cash from strongest to weakest.

If cash ranks higher than international and US equities, the portfolio will allocate 100% to US T-bills.

Step 2: Factor allocation

Once global allocations are determined, DALI uses relative strength rankings to allocate between PowerShares low volatility and momentum-based ETFs.

The asset classes are evaluated monthly using the DALI asset allocation tool, and the index systematically rebalances if holdings have drifted materially from target allocations.

factor allocation diagram, showing relative strength rankings between ETFs for low volatility and momentum-based

For illustrative purposes only. Not representative of Dorsey Wright's current relative strength rankings.

1 Smart Beta represents an alternative and selection index based methodology that seeks to outperform a benchmark or reduce portfolio risk, or both in active or passive vehicles. Smart beta funds may underperform cap-weighted benchmarks and increase portfolio risk. Beta is a measure of risk representing how a security is expected to respond to general market movements.

2 PowerShares low volatility ETFs are free from sector and geographic constraints found in some other low volatility strategies. As constraints could result in the inclusion of stocks that may not be the lowest volatility stocks within their universe, we refer to the PowerShares low volatility ETFs' unconstrained methodology as the "pure" approach to low volatility.

3 The relative strength strategy is NOT a guarantee. There may be times where all investments and strategies are unfavorable and depreciate in value. Relative Strength is a measure of price momentum based on historical price activity. Relative Strength is not predictive and there is no assurance that forecasts based on relative strength can be relied upon.

4 PowerShares by Invesco does not offer tax advice. Please consult your own tax adviser for information regarding your own tax situation.

5 The Dorsey Wright Multi-Factor Global Equity Index seeks to provide global equity exposure by selecting up to eight exchange-traded funds from the PowerShares DWA Momentum and PowerShares S&P Low Volatility suite of exchange-traded funds (ETFs).


  • DWIN

PowerShares DWA Tactical Multi-Asset Income Portfolio

Intelligent income investing involves more than reaching for yield by investing in the highest yielding asset classes. For a new approach to multi-asset income investing, consider PowerShares DWA Tactical Multi-Asset Income Portfolio (DWIN).

Key features of DWIN

An intelligent approach to income investing:

  • A one ticket solution to an income-focused rotation strategy
  • A systematic and unemotional approach to income allocation and risk management
  • The opportunity to manage credit risk with a U.S. Treasury component that can adjust up to 80%, based on the current universe.1
  • Mitigated concentration risk across income segments2
  • The flexibility to serve as a strategic or tactical allocation

The index methodology

DWIN tracks the Dorsey Wright Multi-Asset Income Index which is contructed as follows:

  • selects between 1 and 5 investments from a universe of income producing exchange-traded funds, with eligibility based on a combination of relative strength and current yield.
  • designed to provide an enhancement to income investing through the use of relative strength analysis.3

Index Allocation Process Ranking by Relative Strength

A universe of subsector ETFs that represent seven different income-producing segments of the securities market is analyzed for relative strength monthly and ranked from strongest (1) to weakest (10). The following funds represent the current universe as of March 10, 2016 and are subject to change.

Source: Dorsey, Wright as of March 10, 2016.
For illustrative purpose only and not intended to depict actual portfolios.

*Parameters of a U.S. Treasury Security ETF allocation

Periodically, US Treasuries will rank highest in relative strength. In these cases, fewer than five ETFs may be held. While four ETFs are used in the relative strength analysis, PLW will act as the sole treasury allocation and can make up to 80% of the Fund.

1 Universe is subject to change based on Dorsey Wright methodology and potentially could hold one ETF that would represent 100% Treasury allocation if additional Treasury ETF(s) added.

2 Each underlying ETF is equally weighted, with each usually representing 20% of the weight of the underlying index. This design helps lesson concentration risk.

3 The relative strength strategy is NOT a guarantee. There may be times where all investments and strategies are unfavorable and depreciate in value. Relative strength is a measure of price momentum based on historical price activity. Relative strength is not predictive and there is no assurance that forecasts based on relative strength can be relied upon.


  • DWTR

PowerShares DWA Tactical Sector Rotation Portfolio

For a one-ticket solution to implement DWA PowerShares Sector 4 Model (POWER4), consider the PowerShares DWA Tactical Sector Rotation Portfolio (DWTR).

Key features of DWTR

  • One ticket solution to a tested rotation strategy
  • Systematic and unemotional approach to sector allocation and risk management
  • The Index is constructed to provide momentum on momentum investing1
  • Cash component(represented by 1-6 month T-Bills) for risk management during market downturns
  • Mitigate concentration risk2
  • Can be combined with other smart beta products or asset classes to create a strategic allocation
  • Facilitates tactical exposure to the strongest market sectors based on relative strength indicators

The index methodology

DWTR is based on the Dorsey Wright® Sector 4 Index which is constructed as follows:

  • formed after the DWA PowerShares Sector 4 Model (POWER4) created by Dorsey, Wright & Associates LLC (DWA).
  • designed to gain exposure to the strongest relative strength sectors3 in the US through the universe of nine PowerShares DWA sector ETFs and cash

Index Allocation Process

Sector Tally Ranking by Relative Strength
A universe of sector ETFs that span 9 broad sectors and cash is analyzed for relative strength monthly and ranked from strongest (1) to weakest (10).

Source: Dorsey, Wright as of Feb. 1, 2016.
For illustrative purpose only and not intended to depict actual portfolios.

Monthly rebalance

  • Sector rankings are evaluated monthly for potential rebalance and reconstitution.
  • Portfolio changes are transacted in a "replacement" method, an rebalanced only when a position drifts materially from its target allocation.
  • If a sector falls out of the top four according to relative strength, it is sold and replaced with the highest ranking sector not currently in the Index.

Rules for the cash allocation

  • If cash (represented by T-Bills) is in the #4 spot, it receives a 25% weighting.
  • For each slot cash moves up in the top four ranking, an additional 25% is allocated to cash. If cash is the #1 ranked asset class, it will receive a 100% weighting.
  • The Index can hold all cash, no cash, or cash in increments of 25%, 50%, and 75%.

Learn more

Fund Overview

Fact Sheet  

1 The Index contains a cash element which seeks to maximize the impact of the momentum factor. The Index holds only the four strongest of the nine sectors or cash based on relative strength indicators, while the portfolios underlying the sectors implement a methodology that weights constituents based upon price momentum instead of traditional market capitalization.

2 The Dorsey Wright Sector 4 Index invests in four sectors, while underlying subsector exposure can vary greatly depending on relative strength. The design helps to lessen concentration risk, while still overweighting strong relative strength sectors.

3 The relative strength strategy is NOT a guarantee. There may be times where all investments and strategies are unfavorable and depreciate in value. Relative strength is a measure of price momentum based on historical price activity. Relative strength is not predictive and there is no assurance that forecasts based on relative strength can be relied upon.

Important Information

There are risks involved with investing in ETFs, including possible loss of money. Shares are not actively managed and are subject to risks including those regarding short selling and margin maintenance requirements. Ordinary brokerage commissions apply. The funds are subject to certain other risks. Please see the prospectus for more information regarding the risks associated with an investment in the funds.

The funds are non-diversified and may experience greater volatility than a more diversified investment.

DWLV

The Fund is subject to the risks of the underlying funds. Market fluctuations may change the target weightings in the underlying funds and certain factors may cause the Fund to withdraw its investments therein at a disadvantageous time.

The fund may engage in frequent trading of its portfolio securities in connection with the rebalancing or adjustment of the Underlying Index.

Momentum style of investing is subject to the risk that the securities may be more volatile than the market as a whole or returns on securities that have previously exhibited price momentum are less than returns on other styles of investing.

Investments focused in a particular industry or sector are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.

There is no assurance that the Fund will provide low volatility.

The risks of investing in securities of foreign issuers, including emerging market issuers, can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.

Obligations issued by US Government agencies and instrumentalities may receive varying levels of support from the government, which could affect the fund's ability to recover should they default. Fixed-income investments are subject to credit risk of the issuer and the effects of changing interest rates. Due to anticipated Federal Reserve Board policy changes, there is a risk that interest rates will rise in the near future.

Stocks of small and mid-sized companies tend to be more vulnerable to adverse developments, may be more volatile, and may be illiquid or restricted as to resale.

DWLV, DWTR & DWIN

The Fund will indirectly pay a proportional share of the expenses of the Underlying ETFs in which it invests (including operating expenses and management fees), in addition to the fees and expenses it already will pay to the Adviser.

A higher portfolio turnover rate will cause the Fund to incur additional transaction costs.

DWTR

Momentum style of investing is subject to the risk that the securities may be more volatile than the market as a whole or returns on securities that have previously exhibited price momentum are less than returns on other styles of investing.

Obligations issued by US Government agencies and instrumentalities may receive varying levels of support from the government, which could affect the fund's ability to recover should they default. Fixed-income investments are subject to credit risk of the issuer and the effects of changing interest rates. Due to anticipated Federal Reserve Board policy changes, there is a risk that interest rates will rise in the near future.

Investments focused in a particular industry or sector are subject to greater risk, and are more greatly impacted by market volatility, than more diversified investments.

The Fund invests primarily in other funds, the Fund's investment performance largely depends on the investment performance of those Underlying Funds. An investment in the Fund is subject to the risks associated with the PowerShares ETFs that comprise the Underlying Index.

Through its investments in the PowerShares ETFs, which each track a specific sector of the US equity market, the Fund also will face specific risks inherent in each of these sectors: basic materials sector, consumer discretionary sector, consumer staples sector, energy sector, financial services sector, healthcare sector, industrials sector, technology sector and utilities sector risk.

Equity risk is the risk that the value of equity securities, including common stocks, may fall due to both changes in general economic and political conditions that impact the market as a whole, as well as factors that directly relate to a specific company or its industry.

DWIN

The Fund is subject to the risks of the underlying funds. Market fluctuations may change the target weightings in the underlying funds and certain factors may cause the Fund to withdraw its investments therein at a disadvantageous time.

Fixed-income investments are subject to credit risk of the issuer and the effects of changing interest rates. Interest rate risk refers to the risk that bond prices generally fall as interest rates rise and vice versa. An issuer may be unable to meet interest and/or principal payments, causing its instruments to decrease in value and lowering the issuer's credit rating.

The values of junk bonds fluctuate more than those of high quality bonds and can decline significantly over short time periods.

The risks of investing in securities of foreign issuers can include fluctuations in foreign currencies, political and economic instability, and foreign taxation issues.

Most MLPs operate in the energy sector and are subject to risks relating to commodity pricing, supply and demand, depletion and exploration. MLPs are also subject the risk that regulatory or legislative changes could eliminate the tax benefits enjoyed by MLPs which could have a negative impact on the after-tax income available for distribution by the MLPs and/or the value of the portfolio's investments.

Preferred securities may be less liquid than many other securities, and in certain circumstances, an issuer of preferred securities may redeem the securities prior to a specified date.

Investments in real estate related instruments may be affected by economic, legal, or environmental factors that affect property values, rents or occupancies. Real estate companies, including REITs or similar structures, tend to be small and mid-cap companies and may be more volatile and less liquid.

The Fund will indirectly pay a proportional share of the expenses of the Underlying ETFs in which it invests (including operating expenses and management fees), in addition to the fees and expenses it already will pay to the Adviser.

A higher portfolio turnover rate will cause the Fund to incur additional transaction costs.

About Dorsey, Wright & Associates, LLC (DWA)

PowerShares has arranged with Dorsey, Wright & Associates, LLC (DWA) to provide specialized ETF analysis on the PowerShares ETFs. The Point & Figure analysis, models and resulting rankings, including any information, data or commentary included therein, should not be considered an offer to purchase or sell, or a solicitation of an offer to buy or purchase any security, including PowerShares ETF shares. The examples presented do not take into consideration commissions, tax implications, or other transactions costs. Neither PowerShares nor DWA through this document, provide investment advice or recommendations regarding any security, fund or market.

There is no relationship between Dorsey, Wright & Associates, LLC ("Dorsey Wright") and PowerShares by Invesco ("PowerShares") other than a license by Dorsey Wright to PowerShares of certain Dorsey Wright trademarks, trade names, investment models, and indexes (the "DWA IP"). DWA IP has been created and developed by Dorsey Wright without regard to and independently of PowerShares, and/or any prospective investor. The licensing of any DWA IP is not an offer to purchase or sell, or a solicitation of an offer to buy any securities.

Information contained herein is based on data obtained from recognized statistical services, issuer reports or communications, or other sources, believed to be reliable. However, such information has not been verified by DWA or the information provider and DWA and the information providers make no representations or warranties or take any responsibility as to the accuracy or completeness of any recommendation or information contained herein. DWA and the information provider accept no liability to the recipient whatsoever whether in contract, in tort, for negligence, or otherwise for any direct, indirect, consequential, or special loss of any kind arising out of the use of this document or its contents or of the recipient relying on any such recommendation or information (except in so far as any statutory liability cannot be excluded).

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