Building Up With Materials ETFs

July 18, 2008 at 6:00 am by Tom Lydon      Bookmark and Share

When it comes to investing, exchange traded funds (ETFs) make it easy to access specific sectors.

While some sectors have become beaten-down in recent months (hello, financials and homebuilders), others have been poster children for success, reports Roger Nusbaum for The Street. Materials and energy have been two areas that have demonstrated strong potential down the line, thanks to domestic and global demand for various commodities such as steel, oil, natural gas and more.

Among the ways to access these areas include:

  • Materials Sector SPDR (XLB) is down 2.9% year-to-date, but it’s outperforming the S&P 500 by 11.3%.
  • iShares S&P Global Materials Sector Index (MXI) is down 1.8% year-to-date, but could benefit down the line from its global outlook. The United States is 20.3% of the fund
  • iShares Dow Jones Basic Materials (IYM) is up 2.7% year-to-date.

Selecting sectors is one of the key strategies in trend following, because as the current situation shows, while there are areas trending down for the time being, other areas are moving up. It’s just a matter of spotting them, but trust us – they’re there!

When choosing a sector, or an ETF to represent it, it is wise for investors to be aware of the current trends in the market that will help move or hinder that sector. This way, investors can move with any changes that are occurring.

These funds are currently below their 200-day moving averages, so you will want to hold off on considering them until they turn around.

Tags: , , , , , , , ,

Subscribe to Our Daily E-mail Newsletter

Enter your e-mail address below to sign up for our daily e-mail newsletter, the Daily Market Update. We will never share your e-mail address with third parties.

Subscribe to Our RSS Feed

Click here to subscribe to our RSS feed

blog comments powered by Disqus

Recent TV Appearances

Now Available:

The ETF Trend
Following Playbook

ETF Trends' new book is now available. Click here for details. Or order online from one of these bookstores:
Amazon        Barnes and Noble


iMoney

ETF Trends' book iMoney is available. Click here for details. Or order online from one of these bookstores:
Amazon        Amazon