ETFs That Deserve A Spot On Your Watchlist
After an amazing 2013, markets are experiencing a bit of a hangover to start the New Year. Worries about the taper along with sluggish economic data—including weakness in both the manufacturing and jobs segments—has pushed stocks sharply lower. In fact, broad markets have fallen by about 5% on the year, erasing much of the strength that investors had seen to end 2013.
Yet while many segments have fallen with the broad markets, a few have shown impressive resiliency, and are actually still up on the year. These segments may thus prove to be solid picks for investors seeking a respite from the market’s current storm, and they could also be great choices for the rest of the year if more turbulence hits the market.
Below, we highlight three such segments—and ETFs to track them—which have not only survived the current market slump, but have actually prospered as well. These funds might have flown under your radar until now, but with their solid performances in what has otherwise been a poor market environment, they could now deserve a place on your watchlist:
Despite the downturn, growing segments of the market are still very much in demand. And given some of the recent health care law changes, this is particularly true for the biotech space, as any new drugs look likely to see a huge market, while the potential for M&A activity remains extremely high.
There are a number of ways to play this trend, but the First Trust NYSE Arca Biotechnology Index Fund (NYSEARCA:FBT) is a great choice. This product receives a top Zacks ETF Rank #1 (Strong Buy), and even with Monday’s slump it is easily beating out the S&P 500 over the past month (also see Biotechnology ETF Investing 101).
This product may be a better choice for investors as it is a nice mix between market cap levels thanks to its equal weight method. This puts 50% into the large cap space, making the fund a higher risk choice, but also a biotech that has some stability attached to it, an interesting combination in today’s market environment.
Concerns over soaring rates really hit the real estate market hard last year, and especially so in the mortgage REIT space. This segment is usually highly leveraged and increases in rates can have a devastating impact, which is why the recent move lower in benchmark rates benefited this space so much.