The stock market’s recovery has been a bit friendlier to certain industry sectors and its exchange traded funds (ETFs) than others. In fact, five out of the nine S&P 500 sectors are in positive territory. So which ones are the top dogs of them all?
The first sector that has performed remarkably well is the basic materials sector. This sector includes industries such as chemicals, construction materials, containers and packaging, metals and mining, and paper along with forest products, states Ron DeLegge for ETF Guide. This sector has gained ground thanks to some part in the rally of the commodities market. The sector’s performance can be reflected through the performance of the Materials Select SPDR (XLB), which is up 23.5% year-to-date and above its 200-day moving average.
The next sector that has flourished is technology. This sector is fairly diverse and includes Internet companies, semiconductor companies, software developers, wireless products and IT consulting services. Some believe that this sector has posted its gains because of its ability to remain innovative, continue to keep consumers on their toes and overall financial strength. The Technology Select SPDR (XLK) is up 19.7% year-to-date and above its 200-day moving average.
To the surprise of some, the last sector that has gained ground is consumer discretionary. This sector is heavily dependent on consumer spending and includes apparel, consumer durables, automotive, restaurants, leisure, media and retailers. Some suggest that this sector has rallied because consumers are optimistic of overall economic conditions. One caution: could rising energy prices once again put a damper on growth here? The Consumer Discretionary Select SPDR (XLY) has gained nearly 11.9% year-to-date and above its 200-day moving average.
So how does one grab exposure to the aforementioned sectors, the best way is by utilizing the above mentioned ETFs. The basic characteristics of ETFs will enable one to grab exposure to the industries while remaining diversified and keeping costs low. This is one reason that the ETF industry saw an increase of inflows of $53 billion for the month of May.
Regardless of how well these ETFs have performed, all investors should always utilize a strategyand know exactly what you ETF holds. After all, we can’t predict the future with certainty.
For more stories on these sectors, visit our technology, retail and consumer and materials categories.
Kevin Grewal contributed to this article.