Sector ETFs With Higher Yields And “Relative” Protection
20 November 2008 at 12:12 pm by Gary Gordon
Is there anything to like about the stock markets around the world? The indicators are decidedly mixed.
For example, on the technical front, all stock indexes are below 50-day and 200-day moving averages. In addition, the level of support at Dow 7880 has been breached. There's very little to like from a technical standpoint.
Economic indicators could hardly be worse, with unemployment rising rapidly as well as businesses struggling to get credit. We already know about consumer weakness. And with numerous industries as well as cities/states asking for "bailout" money, finding the nerve to invest touches off more nerve endings.
Yet there are a few other reasons why some might want to think longer-term. The so-called fundamentals for many corporations are at or near book value, an opportunity rarely seen. The unprecedented level of pessimism/fear is often heralded as a contrarian investors's dream. Finally, with the S&P hitting the 50% loss mark in the current bear, history suggests that there haven't been bear market losses in excess of 50% since the depression era 30s.
I'm not here to persuade anyone to put money to work today. In fact, I've had a decidedly high cash position since the summertime.
Still, it's interesting to see some of the better relative performers on a day when the S&P reached an intra-day low of 782 (50% drop from the top).
| Yield-Seeking? | |||||
| 11/20/08 (Through 2:30 EST) | 1 Month | ||||
| IXP | 0.25% | 2% | |||
| XLU | -1.50% | -1% | |||
| IXJ | -2.50% | -7% | |||
S&P Global Telecom (IXP) is one of the few areas where a rolling 1-month gain was even discernible. In fact, a majority of sector investments were down 12%-18% in the same period.
What makes Global Telecom (IXP) potentially appealing? Maybe it's the 6.4% yield.
Similarly, Global Healthcare (IXJ) has a 3.75% reported yield. And healthcare has been one of the best performers in an otherwise dismal equity environment.
Utilities (XLU) is another benefactor of yield-seeking/perceived safer haven. A yield of 4.2% is double that of the broader market, with a lot less risk (beta).
Disclosure Statement: ETF Expert is a web log ("blog") that makes the world of ETFs easier to understand. Pacific Park Financial, Inc., a Registered Investment Advisor with the SEC, may hold positions in the ETFs, mutual funds and/or index funds mentioned above. Investors who are interested in money management services may visit the Pacific Park Financial, Inc. web site.
