- A growing economy needs power. Among the nearly 400 ETFs we monitor, the ML Utilities HLDR posted the second-best total return performance in February, second only to the PowerShares DB Oil Fund (DBO Quote). The potential for more buyouts, as well as frequent dividend payouts, should provide good downside protection to this group.
- A growing economy needs materials. We are switching into SPDR Materials (XLB Quote) and out of KBW Capital Markets ETF (KCE Quote). In addition to a list of brand-name defensive holdings such as DuPont(DD Quote), Dow Chemical (DOW Quote) and Alcoa(AA Quote), the materials ETF sports a dividend yield of 4.2% which should translates into lower market volatility. The beta for XLB is 1.23 vs. a beta of 1.39 for the high-flying KCE.
- Keep your real estate income. Despite the strong run in these REITs, we are holding on to the Vanguard REIT ETF (VNQ Quote), whose largest holding, Simon Property Group(SPG Quote), was featured in TheStreet.com Ratings: Top Property Stocks. If you have this ETF, keep it. It pays dividends on a quarterly schedule and the March dividend is worth the wait.
- Going more defensive with long-term dividend plays. We are swapping the iShares Morningstar Large Value (JKF Quote) for the PowerShares Dividend Achievers Portfolio (PFM Quote) in an attempt to limit the potential for future losses. This ETF invests in those companies that have increased their annual dividend for more than 10 consecutive fiscal years. The benefit of this is these are usually the last holdings to be sold by long-term investors. Top holdings include Exxon Mobil (XOM Quote), General Electric (GE Quote) and Citigroup(C Quote).
- Keeping the iShares S&P Global Telecom (IXP Quote) worked well during the recent market selloff, and the fund provides good exposure to global telecommunications growth. About two-thirds of holdings are non-U.S. companies, including Vodafone(VOD Quote) and Telefonica(TEF Quote). This ETF also provides a modest 2.4% yield.
- Stick with energy. Our portfolio invests in this sector through the iShares Dow Jones U.S. Energy(IYE Quote).
- Think defense. We're adding the PowerShares Aerospace & Defense (PPA Quote) in place of the iShares Morningstar Small Core (JKJ Quote).
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| Dow Jones | S&P 500 | NASDAQ | 10-Year Note | |
|---|---|---|---|---|
| 10,390.11 | 1,103.25 | 2,189.61 | 34.48 |
Oil *
76.70
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|
UP
1.21
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DOWN
2.73
|
DOWN
4.74
|
DOWN
0.35
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10 Yr
3.45%
SPDR Gold
113.11
|
|
+0.01%
|
-0.25%
|
-0.22%
|
-1.00%
|
Data delayed 20 minutes |














