The markets are looking at uncertainty ahead, with the Presidential elections and fiscal cliff here in the U.S. and changes overseas like the new leadership in China, but investors can still find opportunities in sector exchange traded funds.
For instance, real estate related assets, particularly real estate investment trusts that offer attractive yields, have been a major draw over the past year. [ETF Chart of the Day: Mortgage REITs]
“In the U.S., we are seeing an upward trend in commercial real estate,” Brad Sorensen, director of market and sector analysis, Schwab Center for Financial Research, said in a recent conference call with reporters. “Overall, the market seems to be improving.”
Nevertheless, Sorensen cautions that we may experience a short-term pullback, but over the long-term, the sector is improving.
- Schwab U.S. REIT ETF (NYSEArca: SCHH)
- iShares FTSE NAREIT Mortgage REITs Index Fund ETF (NYSEArca: REM)
- Market Vectors Mortgage REIT Income ETF (NYSEArca: MORT)
He also touched upon the energy sector, especially as consumers see prices rise at the pump, they may get a little on the other end at investing, Sorensen said. While Schwab analysts think demand for energy will stay relatively leveled in the short-term, the long-term story will hineg on emerging market growth. [Sector Investing with ETFs]
“We think demand for oil and natural gas will be relatively limited in the near-term, but we still believe developing markets will need more energy to support their societies and expanding infrastructure,” Sorensen added. “But we would not overbuy or jump into energy right now as they may experience a pullback due to the Eurozone and China.”
The strategist also looked at the health care sector going into the fourth quarter and into next year.