Additionally, he categorizes SPDR Technology Select Sector Fund ETF (NYSEArca: XLK) as a defensive play because of the tech stocks’ low betas – volatility, high cash balances and valuations given their growth.
Parker, though, does not favor traditional defensive plays like the SPDR Consumer Staples Select Sector Fund ETF (NYSEArca: XLP) or iShares Dow Jones U.S. Telecommunications Index Fund ETF (NYSEArca: IYZ).
“Given the high oil price, staples tend to have more exposure to rising commodities,” Parker said. Slowdowns would also translate to “more risk to Telecom dividends than regulated Utilities.”
Utilities Select Sector SPDR
For more information on sector plays, visit our sector ETFs category.
Max Chen contributed to this article.