ETFs Fueled by Hot Stocks

Every day I rank hundreds of ETFs based on a proprietary model that helps me determine which funds have performed best over a set period of time and which have the best chance to continue their trends.

PowerShares Dynamic Networking(PXQ Quote): PXQ and rival iShares S&P North American Networking(IGN Quote) have gained momentum during the past quarter as shared components like Cisco(CSCO Quote) and F5 Networks(FFIV Quote) advanced. PXQ differs from IGN in portfolio construction. While PXQ is a capitalization-weighted index that favors large-cap names like Motorola(MOT Quote) and Research In Motion(RIMM Quote), PXQ uses "merit criteria," including fundamental growth, stock valuation and investment timeliness and risk factors to weight components.

While IGN has bested PXQ for year-to-date return, 40.37% vs. 34.35%, respectively, IGN held up better during the difficult market last year. In exchange for missing 6% on the upside, PXQ's investors fell only 2.76% for the one-year period ending June 30 vs. a 16.86% drop in IGN. Both IGN and PXQ should benefit from the hefty stimulus funds allocated to the networking sector during the stimulus. As broadband access is extended and networking reaches more rural areas, networking ETFs should continue to grow. ...