Although trading volume in some exchange traded funds (ETFs) has spiked rapidly recently, one fund manager is skeptical of some of the movements.

Anthony Welch, the Sarasota Capital Strategies manager, is not buying the recent rally within financials. Although the Financial Select Sector SPDR (XLF) has the second-highest trading volume, the ETF is still down 25% year-to-date, reports Murray Coleman for Index Universe.

Some other funds on the “watch list” include:

• PowerShares Water Resource (PHO): Which is up 1.4% year-to-date, compared with the S&P 500’s -13.7% for the year so far. The fundamentals that are driving PHO’s performance include demand for water treatment systems and technology related to water consumption. All that makes PHO strong for both short and long term prospects.

• iShares MSCI Singapore Fund (EWS): Down 9.9% year-to-date. Singapore is in the middle of and overall expansion going on in Asia right now. The banking system in Singapore is the most stable of the Asian countries, and the employment force is highly educated.

For full disclosure, Tom Lydon’s clients own shares of PHO.

Tags: Asia, Emerging Markets, EWS, Financial, PHO, Singapore, Water, XLF

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