It seems contrary to the general feeling that investment sectors reliant on consumer spending have produced some very attractive returns. The rebound in construction and consumer discretionary since 2008 is nothing short of spectacular when looking at strategies that are focused in this segment. Three ETFs that have enjoyed such positive posted results are introduced.
The SPDR S&P Homebuilders ETF (NYSEMKT: XHB) is based on following the S&P Homebuilders Select Industry Index. The inception date is listed as Jan of 2006 and the ongoing track record shows strong positive performance for most reporting categories. 2008 had a negative impact on XHB. There are 37 stocks held and the largest allocation is with Pulte Group Inc (NYSE: PHM), with 4.51% in this position. The lowest of the rest of the top ten holdings has 3.56% allocated to Lennar Corp (NYSE: LEN). This indicates a more evenly distributed portfolio, with ever decreasing amounts going to the remainder of the portfolio. The operating expense ratio is 0.35% and it appears this portfolio does not change that much. It is a surprise to hear how well this index has performed with all the media attention describing how poor new home sales are these days. More data can be found on https://www.spdrs.com/product/fund.seam?ticker=XHB
The Guggenheim S&P 500 Equal Weight Consumer Discretionary ETF (NYSEMKT: RCD) seeks to mimic the S&P 500 Equal Weight Consumer Discretionary Index. RCD was started in Nov of 2006 and is developing a nice track record that can aid in reviewing the performance during all phases of market cycles. The performance for all reported periods is quite positive and the operating expense ratio is stated as 0.50%. There are 80 stocks held in this portfolio and the top position is Pulte Group Inc (NYSE: PHM), with a weighting of 1.90% of the fund. RCD has a low risk to any one issue and seems to have nearly evenly allocated capital to all of its holdings. RCD deserves extra attention and it appears that this may be an excellent contributor to a portfolio during all market conditions. Additional information is available on http://www.rydex-sgi.com/products/etfs/products/overview.rails?rydex_sym...
The iShares Dow Jones US Home Construction Index Fund (NYSEMKT: ITB) seeks investment performance that matches the Dow Jones US Select Home Builders Index. ITB was formed on May of 2006, has an operating expense ratio of 0.47%, and there are 27 stocks in the portfolio. Lennar Corp (NYSE: LEN) has the largest position with 9.93% of fund held in this stock. It appears the ITB’s performance will be tied to the performance of a few key stocks. 2008 was documented of having a year-over-year loss of 41.85%. Aside from that, it appears ITB has recovered well and is on a good trend. iShares has placed all reportable data on this link http://us.ishares.com/product_info/fund/overview/ITB.htm
After encountering these three ETFs, it appears that there are gems that can be found in the rough. With the universe of investment ideas so large and each one competing for investor capital, it is a challenge for the do-it-yourself investor to encounter such rare finds. It is with persistence to search for such ideas that give the investor a chance to stay ahead of inflation and grow the personal capital position.
Jeffrey L (Jeff) Stouffer is associated with Kingsview Asset Management, LLC and manages the Alexandria Virginia office. He has earned the privilege of using the CAIA and CFP® marks and holds several FINRA licenses. As a practicing financial advisor serving the needs of individual and owners of businesses, he believes in using a wide range of strategies including alternative investments. For additional information, he can be contact via email at jeff.stouffer@kingsviewassetmanagement.com
Comments