This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Cramer's Action Alerts PLUS - See his portfolio and get alerts BEFORE every trade. Learn more NOW!

Economically Sensitive ETFs Have Suffered Since the Fed's Latest Move

And it's not just a number of sector ETFs that are having a hard time since Fed Chairman Ben Bernanke shocked and awed the financial world. In reality, growth-oriented small companies are feeling the sting, as evidenced by the poor showing of iShares Russell 2000 Growth (IWO). Similarly, corporations tied to the well-being of the economic cycle have also been sputtering, as evidenced by weakness in PowerShares S&P 500 High Beta (SPHB).

Need a nail in the proverbial coffin? On a month-over-month basis, investors appear to have rotated back into safer, less-volatile segments since the Fed went beyond confirming QE3 rumors to announce open-ended mortgage purchasing with money it will print electronically. Leadership is coming from utilities, tracked by the Select Sector Utility SPDR (XLU); health care, tracked by the Select Sector Health Care SPDR (XLV); and the ever-so-tame S&P 500 Low Volatility Fund (SPLV). (I included these three ETFs in the table on the preceding page.)

Does this mean that the Fed's initiative to revive a stagnant economy will fail? I don't think anyone can predict the future. That said, investors for the most part bought the central bank reflation rumors in July and have been selling the news in September and October.

In my estimation, the best risk-reward ETFs reside in the middle of the spectrum. Assets that have relatively wide historical yield spreads with comparable Treasuries are still attractive. This includes vehicles like iShares Intermediate Corporate Credit (CIU), iShares Emerging Market Corporate (EMB), PowerShares Emerging Market Sovereign (PCY) and PowerShares Preferred (PGX).

Additionally, Asia Pacific ETFs are still in a "buy the rumor" stage. In essence, China has plenty of wiggle room on both fiscal and monetary policy while investors expect that China will take action to stimulate its economy. Not surprisingly, some of the best month-over-month performers are Asia Pacific ETFs, including iShares MSCI Philippines (EPHE), iShares MSCI New Zealand (ENZL) and iShares MSCI Malaysia (EWM). Consider getting ahead of the curve with China's neighbors.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

Disclosure Statement: ETF Expert is a website that makes the world of ETFs easier to understand. Gary Gordon, Pacific Park Financial and/or its clients may hold positions in ETFs, mutual funds and investment assets mentioned. The commentary does not constitute individualized investment advice. The opinions offered are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial or its subsidiaries for advertising at the ETF Expert website. ETF Expert content is created independently of any advertising relationships. You may review additional ETF Expert at the site.

Gary Gordon reads:

Real Clear Markets
Jeff Miller
indexuniverse
Charles Kirk
On Twitter, Gary Gordon follows:

Jonathan Hoenig
Doug Kass
Hard Assets Investor

2 of 2

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Try it NOW
Only $9.95
Try it NOW
14-Days Free
Try it NOW

Check Out Our Best Services for Investors

Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Options Profits

Our options trading pros provide over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • Actionable options commentary and news
  • Real-time trading community
Try it NOW
Try it NOW
Try it NOW
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
AAPL $124.95 -1.10%
FB $82.50 -0.84%
GOOG $549.26 -0.50%
TSLA $188.78 -0.94%
YHOO $44.42 -1.20%

Markets

DOW 17,742.16 -33.96 -0.19%
S&P 500 2,067.89 -18.35 -0.88%
NASDAQ 4,900.8850 -46.5560 -0.94%

Partners Compare Online Brokers

Free Reports

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs