Sector Smackdown

A reader asked which sector funds I prefer; the iShares S&P Global funds or the WisdomTree foreign sector funds. I use a couple of sector ETFs broadly and some accounts own quite a few sector ETFs as a function of account size or tolerance for single stock volatility. Well, one family is not better than the other. Each of the two do something that is a little different than the other. The iShares line combines foreign and domestic with some of the funds having a lot of domestic and some others having a lot of foreign. The WisdomTree line is all foreign and by virtue of the dividend weighting it seems that all the funds skew to certain countries like the UK and Australia. If you want to build your portfolio by sector and want to capture any sectors using an ETF I think you need to look at all the families to find the best one for your portfolio which includes the sector SPDRs, the iShares domestic, the equal weights, the PowerShares sector funds, some of the strays like First Trust and some of the themed funds that could be proxies for sectors. Doing this requires looking under the hood. Does a given fund have too much in one stock (a stock you don’t like)? Does the fund tilt too far in favor of a particular sub-sector? Is a particular sector a better place to add foreign or domestic? What about yield, volatility or country makeup? The point here is probably that selecting an ETF takes work. There is possibly less work involved than selecting a stock and...

Sector Smackdown

A reader asked which sector funds I prefer; the iShares S&P Global funds or the WisdomTree foreign sector funds. I use a couple of sector ETFs broadly and some accounts own quite a few sector ETFs as a function of account size or tolerance for single stock volatility. Well, one family is not better than the other. Each of the two do something that is a little different than the other. The iShares line combines foreign and domestic with some of the funds having a lot of domestic and some others having a lot of foreign. The WisdomTree line is all foreign and by virtue of the dividend weighting it seems that all the funds skew to certain countries like the UK and Australia. If you want to build your portfolio by sector and want to capture any sectors using an ETF I think you need to look at all the families to find the best one for your portfolio which includes the sector SPDRs, the iShares domestic, the equal weights, the PowerShares sector funds, some of the strays like First Trust and some of the themed funds that could be proxies for sectors. Doing this requires looking under the hood. Does a given fund have too much in one stock (a stock you don’t like)? Does the fund tilt too far in favor of a particular sub-sector? Is a particular sector a better place to add foreign or domestic? What about yield, volatility or country makeup? The point here is probably that selecting an ETF takes work. There is possibly less work involved than selecting a stock and...

Tidbits Over Coffee

Our friends Russell and Michelle have been visiting from Fresno for the last few days and are headed out this afternoon so the video will come later than normal. Russ was my best man when Joellyn and I got married in 1993. The market will be closed four days in a row; all of Pisani’s chatter about this notwithstanding it is a nice break. Barron’s has some great stuff this week. There was some content about WisdomTree’s progress so far. The more I think about it the more I think what they are doing will lead to a lot more innovation throughout the industry as a function of needing to compete. Barron’s also had a bit on the India ETN (INF) and what you know, Sonya Morris from Morningstar didn’t have anything good to say. She feels India has had its run. Great but a diversified portfolio combines stuff that has had its run and stuff that hasn’t run yet. India has run and healthcare hasn’t. Couldn’t India keep running and couldn’t healthcare not run again? Do you have be 100% right to have success? The Current Yield column had some predictions for the yield on the ten year treasury. I am not part of what appears to be a four handle-consensus. I am hoping for a growth spurring steepening of the curve which could mean the mid fives to low sixes at some point in the near future. I don’t think we avoid a normal recession (as I have been saying all along) but if it comes it will end and then we will grow by some measure....

Tidbits Over Coffee

Our friends Russell and Michelle have been visiting from Fresno for the last few days and are headed out this afternoon so the video will come later than normal. Russ was my best man when Joellyn and I got married in 1993. The market will be closed four days in a row; all of Pisani’s chatter about this notwithstanding it is a nice break. Barron’s has some great stuff this week. There was some content about WisdomTree’s progress so far. The more I think about it the more I think what they are doing will lead to a lot more innovation throughout the industry as a function of needing to compete. Barron’s also had a bit on the India ETN (INF) and what you know, Sonya Morris from Morningstar didn’t have anything good to say. She feels India has had its run. Great but a diversified portfolio combines stuff that has had its run and stuff that hasn’t run yet. India has run and healthcare hasn’t. Couldn’t India keep running and couldn’t healthcare not run again? Do you have be 100% right to have success? The Current Yield column had some predictions for the yield on the ten year treasury. I am not part of what appears to be a four handle-consensus. I am hoping for a growth spurring steepening of the curve which could mean the mid fives to low sixes at some point in the near future. I don’t think we avoid a normal recession (as I have been saying all along) but if it comes it will end and then we will grow by some measure....

Happy New Year!

This won’t be a market related post per se but just a thank you to readers of this site for a great year. It amuses me to no end that there is any interest at all in my ramblings here and elsewhere. I get tremendous enjoyment from the idea that I get to help some people learn a little more about investing and I also learn quite a bit back from reader comments. 2006 was a great year for me personally and the success of the blog contributed to the year. I hope 2007 will also be a good year. Good does not mean the market has to go up, here I am thinking about balance in our lives. Not sure if it comes through the blog or not but I spend a lot of time on my work but I have other interests. Spending too much time on any one thing is not ideal. I have other interests and hopefully you do too! It is an easy bet that 2007 could have more innovative products come out that allow do-it-yourselfers to have an ever better chance for success with their portfolios in the shorter run hopefully leading to reaching long term goals. Remember beating the market by 2% this year (if that is what you did) means nothing if you are investing for any type of long term goal. Chances are five years from now you won’t remember exactly how you did in 2006. Thank you again for 2006 and I hope you’ll continue to stick with this blog in 2007 as well. Happy New...