Top Three ETFs for 2010

PBW is designed to deliver capital appreciation through exposure to companies that focus on greener and generally renewable sources of energy and technologies that facilitate cleaner energy. This large, liquid ETF tracks 52 firms, including JA Solar Holdings(JASO), Fuel Systems Solutions(FSYS) and Advanced Battery Technologies(ABAT).

Cleaner energy and the reduction of carbon emissions will be top items on the political agenda in 2010. As companies work to comply with new standards, investors in PBW will already be ahead of the curve. (See "ETF Plays for Copenhagen Talks".)

ETFs are an easy, inexpensive way to gain access to short-term market trends and diversify a long-term portfolio. As investors move assets into segments of the market like clean energy, inflation protected securities and high-yielding equities, the rapidly expanding ETF marketplace will evolve to meet their changing needs.

Inflation concerns fueled the recent launch of three additional TIPS ETFs by bond giant PIMCO, while the buzz over renewable energy has produced increasingly focused green ETFs.

Investors looking to participate in these areas of the market should aim for ETFs with high liquidity and low expense ratios. (See "Tips for Trading ETFs".)

DVY, TIP and PBW are good funds to target in 2010.

-- Written by Don Dion in Williamstown, Mass.

At the time of publication, Dion owned DVY and TIP.

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