Domestic ETFs: The Outlook in 2010 | ETF Trends

Domestic equity exchange traded funds (ETFs) have been off to a lackluster start so far this year, but we’re only a few weeks into 2010. What’s the outlook for the other 49 weeks to come?

This year looks like a good year for more merger & acquisition transactions and corporations inch their way back to fiscal health. Investors may also try and weed out weaker companies in their portfolios and switch to companies with better fundamentals. However, if the economy doesn’t improve as quickly as people would expect, stock prices may take a dip. Have your strategy at the ready if that happens. The reduction in monetary and fiscal programs around the world will also dampen the stock market’s forward momentum. [How to follow trends.]

Between Jan. 15 and Jan. 22, all sectors within the broader S&P 500 index showed negative returns, writes Frank Holmes for U.S. Global Investors. U.S. Global Investors is one of the best-known gold managers in the world (for full disclosure, I’m a board member).


  • The retail food group showed the strongest gains,  jumping 5.4% for the week.
  • Airliners were the second-best performers, up 3.6%. Airliners are seeing lower capacity, route optimization and increased passengers. [The key to airline’s success.]
  • Regional banks also outperformed, increasing 1.1%. The administration put new regulatory action on large banks, which has turned some investors toward regional banks. [Why regional banks could come out ahead.]


  • Aluminum, diversified metals & mining and steel groups dropped 14.3%, 11.9% and 9.9%, respectively. This may mostly be a response to China’s slowing down its economic growth.
  • Health care facilities group lost 15.5%. The health care bill has lost momentum after a Republican won a Senate seat – hospitals would have more business if more people had health insurance. [Health care’s prospects.]
  • Diversified financial services group fell 8.7%. Large banks were sold off after President Barack Obama’s proposed new regulations.

As the economy changes and grows in the coming year, there are plenty of domestic-focused ETFs to watch:

  • S&P 500 SPDRs (NYSEArca: SPY)
  • Health Care Select Sector (NYSEArca: XLV)
  • SPDR S&P International Telecommunications Sector (NYSEArca: IST)
  • Consumer Staples Select Sector SPDR (NYSEArca: XLP)
  • Consumer Discretionary Select Sector SPDR (NYSEArca: XLY)
  • Select Sector SPDR Utilities (NYSEArca: XLU)
  • Industrial Select Sector SPDR (NYSEArca: XLI)
  • Technology Select Sector SPDR (NYSEArca: XLK)
  • Energy Select Sector SPDR (NYSEArca: XLE)
  • Financial Select Sector SPDR (NYSEArca: XLF)
  • SPDR Select Sector Fund- Basic Industries (NYSEArca: XLB)

For more information on the S&P 500, visit our S&P 500 category.

For full disclosure, Tom Lydon is a board member of U.S. Global Investors.

Max Chen contributed to this article.

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.