Earnings Season: 'Safer' Sector ETFs Are Winning

The following commentary comes from an independent investor or market observer as part of TheStreet's guest contributor program, which is separate from the company's news coverage.

NEW YORK (ETF Expert) -- There has been a lot of talk about equity market resilience. There has been even more talk about the enormous amount of stock ETF inflow... $5.5 billion last week alone!

Nevertheless, the largest gains are coming from the least volatile sectors. Healthcare ETFs have been noteworthy outperformers over one and three months. What's more, share prices of peanut butter and toothpaste corporations (consumer staples companies) are also hitting new 52-week highs.

Perhaps ironically, earnings season was supposed to validate the reason to continue investing in the economically sensitive cyclical sectors. Unfortunately, the markets banged up materials companies when Alcoa's revenue came up short. Investors crucified "big tech" when Google(GOOG) missed profit expectations. And investors soured on financial stocks when J.P. Morgan Chase(JPM) suggested that one shouldn't expect additional dividend hikes anytime soon.

Validation for the drivers of the economy? Hardly. In fact, non-cyclicals claimed the 5-day prize in the initial week of earnings reports.

In truth, it's far too early to declare long-term victory for the less risky stock ETFs. The fact that mutual fund managers prefer to tread cautiously into healthcare and consumer staples with new-found inflows may signal a cautious money management environment; it hardly signifies a death blow for the bull.

If the broader non-cyclicals don't give you enough of a boost, you might consider one or more sub-sector ETFs. The iShares DJ Healthcare Providers Fund(IHF) has more than doubled the performance of Healthcare Select Sector SPDR(XLV) since the November elections. Meanwhile, Claymore Guggenheim Global Water(CGW) has outperformed Utilities Select Sector SPDR(XLU) over five days, one month, three months, six months and one year. You can listen to the ETF Expert Radio Show "LIVE", via podcast or on your iPod. You can review more ETF Expert features here.

>To order reprints of this article, click here: Reprints