It doesn’t seem like it now, but the markets won’t always be depressed and there will come a time to get back into exchange traded funds (ETFs).
But will the ETF marketplace benefit when the pendulum swings back? The debate is still hot concerning the market’s recent progress and whether the worst is behind us yet. Investors should be ready to be in a good position to capture the next upswing, whenever it takes place.
Investors who have been in cash as they’ve waited for the markets to recover are going to start looking around for places to put their money back in, and ETFs are going to prove to be an attractive option for them. They offer low fees, intraday trading, transparency and quick diversification. As word of them spreads, we predict big growth in them because of their attractiveness.
Billy Fisher for The Street spoke to Mark Luschini, a strategist for Janney Montgomery Scott, who reports some probable areas set up for a prolonged recovery-primarily financials and consumer discretionary. ETF investors should consider positions in:
- Financial Select SPDR (XLF), down 8.4% year-to-date
- Vanguard Financials (VFH), down 7.6% year-to-date
- iShares Dow Jones U.S. Financial Sector (ITF), up 0.3% year-to-date
- Vangurd Consumer Discretionary (VCR), down 1.9% year-to-date
- PowerShares Consumer Discretionary (PEZ), down 3.6% year-to-date
- Consumer Discretionary SPDR (XLY), up 0.6% year-to-date
Financials have taken their share of the beating, so any upward trend is going to help them shine.
We recommend that you wait until any funds you’re eying cross their trend lines, however. Don’t just get in because you think an area is going to turn around. Take a look at our strategy for getting back in.
The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.