The U.S. equities markets are hovering near record highs, making it harder to single out winners next year. Nevertheless, investors can utilize exchange traded funds to pick and choose broad market sectors.
Thomas Lee, founder of Fundstrat Global Advisors and former chief U.S. equity strategist at J.P. Morgan, argues that it will be challenging to pick winners in 2015 but still remains bullish with the broader equities market, reports Matthew J. Belvedere for CNBC.
Next year, “there should be much more pronounced divergence in sectors,” Lee said on CNBC.
Specifically, Lee argues that financial, technology and health care sectors could outperform in 2015.
Instead of trying to shift through the thousands of stocks that make up these sector, investors can utilize a broad sector-specific ETF to capture these areas.
For financial exposure, investors can use the Financial Select Sector SPDR (NYSEArca: XLF), Vanguard Financials ETF (NYSEArca: VFH) or iShares U.S. Financials ETF (NYSEArca: IYF). XLF has a 0.16% expense ratio, VFH has a 0.19% expense ratio and IYF has a 0.45% expense ratio. [Financial ETFs: Banks See Best Revenue Growth in Five Years]
The Technology Select Sector SPDR (NYSEArca: XLK), Vanguard Information Technology ETF (NYSEArca: VGT) and iShares U.S. Technology ETF (NYSEArca: IYW) all offer broad technology exposure. XLK has a 0.16% expense ratio, VGT has a 0.14% expense ratio and IYW has a 0.45% expense ratio. [Holiday Optimism Lifts Semiconductor ETFs to New High]
Lastly, investors can access the healthcare sector through the Health Care Select Sector SPDR (NYSEArca: XLV), Vanguard Health Care ETF (NYSEArca: VHT) and First Trust Health Care AlphaDEX Fund (NYSEArca: FXH). XLV has a 0.16% expense ratio, VHT has a 0.14% expense ratio and FXH has a 0.66% expense ratio.
Market observers are largely bullish on the equities market going into next year. For instance, BlackRock chairman and CEO Larry Fink stated that there’s a high probabiliy of stocks continue to strengthen as low inflation from falling oil prices will keep the Federal Reserve from pushing off rate changes.
“The best point for equity markets historically … is when you have rising earnings, low inflation and low but rising interest rates. That’s the sweet spot for equities,” Darrell Cronk, president of the newly formed Wells Fargo Investment Institute, said on CNBC. “Equity investors should enjoy where they sit right now.”
For more information on the market sectors, visit our sector ETFs category.
Max Chen contributed to this article.