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The financial services sector, the second-largest sector weight in the S&P 500 behind technology, has spent considerable time this year lagging the benchmark U.S. index.

However, that situation appears to be abating. Over the past month, the S&P 500 is up nearly 3%, but some major financial services ETFs have been noticeably better. For example, the Financial Select Sector SPDR (NYSEArca: XLF ) and the Vanguard Financials ETF (NYSEArca: VFH ) are up an average of 3.5% over that period.

Impressive, but those performances are well-off the 6.2% gain posted by the unheralded PowerShares DWA Financial Momentum Portfolio (NYSEArca: PFI ) over the same period. In a testament to PFI’s strength, just over 70 ETFs made new all-time highs Monday, but PFI was one of just three diversified financial services funds to accomplish that feat. [Investors Cool on Bank ETFs]

On a year-to-date basis, PFI trails the aforementioned rival financial services ETFs, but much of the advantage over PFI was accrued by those funds early in the year. Over the past six months, PFI is nearly even with XLF and VFH. Over the past 90 days, the PowerShares offering has topped VFH by nearly 210 basis points.

PFI was one of 10 PowerShares ETFs, including nine sector funds, that transitioned to momentum-based Dorsey Wright indices in February. Those indices focus on identifying stocks with impressive relative strength and have fostered performance advantages for several other ETFs in that PowerShares stable. [Index Swap Helping These ETFs]

Said another way, PFI’s underlying index is far more flexible than a traditional cap-weighted index, which has enabled the ETF to be less dependent on lagging money center banks and regional banks while being heavily allocated to real estate investment trusts (REITs).

PFI’s nearly 26.5% allocation to REITs is the ETF’s largest industry by nearly 780 basis points over insurance providers. That has positioned the ETF nicely to take advantage of this year’s tumble in Treasury yields. [Falling Treasury Yields Lift REIT ETFs]

Five of PFI’s top-10 holdings are REITs. Also found among that top-10 lineup is Invesco (NYSE: IVZ), parent company of PowerShares, shares of which are up 10.4% this year.

PFI’s REIT allocation would appear to make the ETF sensitive to rising rates, but that underscores the utility of the underlying index’s methodology. If momentum for REITs wanes, exposure to the industry will be reduced. Additionally, the ETF allocates 18.7% of its weight to insurance providers and features five regional banks among its 43 holdings. Those are two financial services sub-sectors that typically thrive when Treasury yields rise. [Insurance ETFs Wait on Higher Interest Rates]

PFI is only home to one money center bank – Wells Fargo (NYSE: WFC) – and one Wall Street bank – Morgan Stanley (NYSE: MS). The ETF sports a P/E ratio of 17.6 and a price-to-book ratio of 1.9, according to issuer data .

PowerShares DWA Financial Momentum Portfolio