Following Trends With ETFs

January 08, 2008 at 6:00 am by Tom Lydon

The exchange traded fund (ETF) winner’s circle for 2008 has been assembled and examined by many.

Jonathon Burton for MarketWatch on Fox Business reports that Will Danoff, manager of Fidelity Contrafund, and Bill Gross, chief investment officer at Pimco, have their momentum-based expectations for ETFs in 2008.

Let’s take a look:

Energy, materials and utilities were three of the S&P sectors that had greatest price appreciation in 2007. For exposure to those areas, take a look at Energy Select SPDR (XLE) or Vanguard Energy (VDE). For materials exposure: Materials Select Sector SPDR (XLB) or iShares Dow Jones US Basic Materials (IYM). For utilities, there is Utilities Select Sector SPDR (XLU) and iShares Dow Jones US Utilities (IDU).

Sam Stovall, chief investment strategist at Standard & Poor’s, reminds us that momentum can turn on a dime. He cites the health care sector in 1991 as an example. It was up 50% for that year, but the following year it was down 19%.

Whatever trend you’re following, just be sure to take a disciplined approach and remember to follow through with your strategy.

Tags: Energy, Material ETFs, Utilities