The non-dollar focused bond funds are gaining traction as the U.S. dollar weakens against the currencies of emerging market countries. Meanwhile, central banks overseas have risen rates in countries where growth has momentum, compared to the U.S. where benchmark yields are hovering around zero.
Investors are also flocking to commodities-focused ETFs. For example, the Market Vectors Rare Earth and Strategic Metals (NYSEArca: REMX) has about $465 million in assets, since its October 2010 launch. However, narrow sector funds can be much more volatile. [Molycorp Lifts Rare Earth ETF]
“The two biggest concerns are where is the West going to get the rare earth metals and of those companies in the west and Australia, which ones will actually get to production,” says Malcom Gisson, co-manager at Encompass Funds.
Tisha Guerrero contributed to this article.