Materials ETF Helps You Benefit From Boom

07/15/08 - 11:03 AM EDT

Roger Nusbaum

The Industrial Sector SPDR (XLI Quote - Cramer on XLI - Stock Picks) allocates 16% to GE while the PowerShares Water Portfolio (PHO Quote - Cramer on PHO - Stock Picks) only 3%. This has been a big difference maker, over the last two and half years PHO is up 30% and XLI is up mid-single digits.

Click here for larger image.

Just as PHO has done better for its much smaller weight to GE, it will be just as sure that when GE finally does provide leadership again, XLI will outperform PHO.

Sector selection is important, but how a sector is accessed once selected is just as important.

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At the time of publication, Nusbaum was long MXI, RIO, AAUK, PHO, MON on behalf of himself and/or clients, although positions may change at any time.

Roger Nusbaum is a portfolio manager with Your Source Financial of Phoenix, and the author of Random Roger's Big Picture Blog. Under no circumstances does the information in this column represent a recommendation to buy or sell stocks. Nusbaum appreciates your feedback; click here to send him an email.

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