Quantitative Analysis Service, Inc.

When Is The Right Time For A Niche Market Investment?
By: Steve Malinsky | 05 Feb 2016


ETFs mentioned in this article: WisdomTree Europe SmallCap Dividend Fund™(DFE), First Trust ISE Global Wind Energy ETF™ ( FAN)


Looking back and analyzing serious equity market selloffs in the past, we can make the observation that they have typically unfolded in a “broad-based” manner (all market cap sizes and sectors). Investors expressed high levels of fear (and panic) and simply reduced or completely eliminated equity exposure.

January of 2016 is no exception. The large, mid and small cap indexes declined in unison. For a few days, our own screening tools did not display any positive equity segments.

Lights off. Defensive action suddenly becomes clearer – treasury bonds up, gold and euro up. Investors leave equity and look for protection in bonds, commodities and currency markets.

After several weeks of decline the equity market is trying to improve going into February. However, only a few sectors show signs of life. Some of them, like Utilities and Gold Miners, have been beaten down for many months.

Fortunately, investor’s menu of ETFs today provides investment community with the ability to look into some niche markets that do not normally attract attention of the Wall Street media. The role of niche markets increases during selloffs. These relatively small markets can provide additional diversification to your portfolio, and improve a portfolio’s performance.

It’s not always clear why certain niche markets such as “European Small Cap Dividend” and “Global Wind Energy” baskets become attractive for investors, but certain highly sensitive tools like the QAS ETF Strategist Online actually captured these niche markets on February 2, 2016 (WisdomTree Europe SmallCap Dividend Fund™ ETF – DFE™, and First Trust ISE Global Wind Energy ETF™ – FAN™). Our multi-level quantitative screening process triggers significant price improvement in these niche markets per both absolute and relative parameters.

When the equity market presents very few opportunities, good screening tools can help identify smaller segments that can boost portfolio performance.

For more information on our new and improved ETF Strategist Online Platform please contact QAS at:

http://www.qas-service.com/etf.html (Institutional investors only)


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When Is The Right Time For A Niche Market Investment?
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