Barbells or Steroids?

By March 21, 2007ETF Strategy

Utility ETFs continue to show an enormous amount of interest on the part of international and domestic investors. At the same time, there have been some aggressive moves back into emerging markets and several technology segments.

What might this suggest? Could it be that ETF investors are aggressively jumping back into international and technology, while at the same time shoring up their defensive positions with utilities?

When investors split portfolios into an income-oriented side and aggressive growth portfolio side… it is sometimes a sign of a “a barbell approach” to investing.

Here’s an example: One might load up on aggressive segments like B2B Internet HOLDRs (BHH) and the PowerShares Lux Nanotech (PXN). That represents one side of the barbell. On the other, income-oriented holdings like iShares 1-3 Treasuries SHY and SPDR Utility index XLU for the other side.

Does barbelling it work? Sometimes. However, this particular example was purely hypothetical. It is my belief that regardless of choosing an aggressive position or a defensive position, one must always have a plan to sell.

Disclosure statement: Some of Pacific Park’s investment clients may hold positions in any of the investments mentioned above.

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