Join        Login             Stock Quote

A Trio Of Top ETFs For 2013

 January 29, 2013 12:29 PM

by Mark Salzinger, editor Investor's ETF Report

This month we survey our top picks for the coming year. These are the ETFs that we believe offer the best potential for gains relative to their risks.

Here's a look at our favorites among U.S. equity funds, foreign stock funds, and fixed-income ETFs.

U.S. equity ETFs

Our favorite U.S. stock ETF for 2013 is iShares S&P Mid Cap 400 Growth (IJK). Since we added this ETF to

Wealth Builder in September, it has gained 5.2%, vs. 2.2% for SPDR S&P 500.

Over the long term, mid caps have outperformed large caps, but with less volatility than small caps. We think mid-cap ‘growth' stocks are attractive now because of their overall valuation, growth prospects and attractive sector exposure.

[Related -The S&P 500’s Worrisome Downturn In Drawdown]

IJK's portfolio offers reasonably well diversified sector exposure. Technology and consumer discretionary stocks lead the way with about 20% of the portfolio each, but the portfolio also has significant helpings of industrials (18%), financials, mostly REITs and asset managers (17%) and healthcare (11%).

Foreign stock ETFs

Vanguard FTSE All-World ex-US (VEU) is as simple as it comes in foreign-stock investing: it owns a market-cap weighted portfolio of non-U.S. stocks from virtually everywhere else stocks are offered.

Through this one package, investors gain exposure to developed markets (including Europe, Japan, Canada and Australia) and emerging markets (such as China, Brazil, Russia and emerging Asia). It levies a miniscule expense ratio (0.18%) and recently sported a decent yield (3.3%).

[Related -Deflation Warning: The Next Wave]

VEU's forward P/E was recently 11.8, making non-U.S. stocks less dearly valued relative to U.S. stocks. VEU's dividend is also stronger than that of the broad U.S. stock market.

Fixed-income ETFs

Most U.S. fixed-income investments are not particularly attractive. They have very low yields relative both to history and prevailing risks, which include interest rate sensitivity and economic sensitivity.

However, we think that emerging market bonds offer attractive yields relative to their risks and prospects—and we especially like emerging market bonds denominated in local currency.

So our top fixed-income pick for 2013 is WisdomTree Emerging Market Local Debt (ELD). Recently, about 90% of ELD's portfolio was rated investment-grade and yielded 3.8%. For minimally more credit risk, investors in ELD earn a full percentage point more in yield than investment grade corporates.

ELD's portfolio is actively managed and tiered. The heaviest allocations go to the countries that the managers believe have an attractive combination of stability and potential.

Recently, Mexico, Brazil, Indonesia and Malaysia each got about 10% of the portfolio; Poland, Turkey, South Korea, Russia, Thailand and South Africa each got about 7%; Peru, the Philippines, Chile, China and Colombia each got about 3.3%. ELD's expense ratio is 0.55%.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageThe S&P 500’s Worrisome Downturn In Drawdown

Last Friday I reviewed some of the bearish signals that were casting dark shadows across the US stock read on...

article imageADP: Private-Sector Employment Rises A Solid 200k In September

The pace of growth for private-sector employment picked up in September, according to this morning’s ADP read on...

article imageTreasury Market’s Inflation Expectations Tumble

The odds for a Fed rate hike are falling like a stone, or so it appears based on the implied inflation read on...

article imageEmerging Market Stocks: Last Week’s Red-Ink Leader

Value investors on the lookout for bargains have recently been eyeing up the battered corner of emerging read on...

Popular Articles

Daily Sector Scan
Partner Center

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.