March 30, 2008 at 1:00 am by Tom Lydon
The PowerShares FTSE RAFI Industrials Sector (PRFN) exchange traded fund (ETF) could benefit from optimism in the industrial sector down the line.
How’s that? Many of the companies in this fund’s top holdings have a global reach, including General Electric (GE), which is far and away the largest holding in the fund at 18%. Another holding, Caterpillar (CAT), is up 10.6% year-to-date and makes up 2.6% of the fund. United Parcel Service (UPS), which is 4.1% of the fund, has an extensive global network. Developing markets in a growth spurt help fuel the demand for the products these companies offer and help offset the damage of a U.S. slowdown, reports Don Dion for Seeking Alpha.
The fund represents a wide range of sectors, including defense and aerospace, machinery makers, transportation and software.
The fund is down 4.6% so far this year, but if the sectors that it represents continue to post gains, this ETF could stage a turnaround. A prolonged recession in the United States, however, could pinch this ETF, while a global slowdown would really hurt. If this fund moves above its trend line (200-day moving average), it could be one to keep an eye on.
Tags | Aerospace & Defense, Emerging Markets, Industrials, Large Caps, Technology, Transportation
