“I like the two largest sectors for DTN for a few reasons. Investors have been shying away from the utilities sector recently because that sector tends to underperform during times of rising rates. However, the Fed recently reaffirmed its commitment to a low rate policy for a “considerable time”, the phrase investors have been anxiously waiting to hear. This should give investors renewed confidence to head back into the utilities sector, as rates will continue to stay low and utilities stocks tend to have above-average dividend payouts that are lucrative during this type of market,” adds McPiro.
Conversely, DTN also offers ample rising rates protection in the form of its combined 30.6% weight to echnology, industrial and consumer discretionary names. Additionally, DTN allocates 12.3% of its weight to the energy sector, the top-performing sector during the rate tightening cycle of 2004 through 2006. [Winning Sector ETFs for Rising Rates]
WisdomTree Dividend ex-Financials Fund
Tom Lydon’s clients own shares of DTN.