ETF Expert

The ETFs that focus on large-cap companies with exposure to basic materials have had exceptional returns for the year. Materials Select Sector SPDR (XLB) and Vanguard Materials ETF (VAW) have returned 7.5% and 8.3% respectively.

Rudy Martin of The Street.com says that the global economy is still growing and that a growing economy needs materials. I am not going to disagree with that!

Both of these ETFs hold some of the largest raw material providers – Du Pont (DD), Dow Chemical (DOW),  Alcoa (AA), and Phelps Dodge (PD). More obvious, the demand for aluminum and copper in China has given Alcoa and Phelps Dodge amazing profit potential.

The question that everyone seems to be asking at this point is whether the market will stall, and take down everything wit hit. Or if the market finds a decent footing, can materials continue its upward trend? I believe that the market will not only find its footing, but that materials will still be surging, even if the U.S economy cools significantly.

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