With global markets reeling, many investors are staying
laser-focused on American securities. These have held up pretty
well so far in 2013, as the S&P 500 is up double digits while
the dollar is in the green against a global basket of currencies
And with many data points coming in strong for the U.S.
market, there is no reason to think that this trend cannot
continue in the second half of the year as well. After all,
stocks have recovered nearly all of their Fed-induced losses,
while data on the manufacturing, housing, and consumer fronts
have all come in ahead of expectations in recent weeks (read
3 ETFs for Your Portfolio This Summer
Global markets on the other hand, seem beset by a variety of
woes that could continue to drag down their securities in the
second half of 2013. Many stocks in these nations have failed to
recoup their own Fed-related losses, while political issues
threaten nations in the EU as well as developing ones across the
In this type of environment, a focus on All-American
could be a great way to go. For investors seeking to apply
this approach to their portfolios, we have highlighted three ETFs
below which could provide exposure with a domestic tilt, an ideal
strategy in times of global distress:
SPDR S&P Retail ETF (
The resiliency of the American consumer is legendary at this
point, with consumer spending continuing to grow at a solid clip.
And with home prices surging, many will likely have the
confidence to spend even more this year.
This is further confirmed by a few of the recent readings on
the consumer front. The sentiment figures hit 84.1, beating out
consensus of 83.0
. Plus, the expectations also rose by two points when compared to
May, suggesting a bullish outlook for this space as well (see
3 Top Ranked Consumer ETFs to Buy Now
One way to play this with ETFs is via XRT, an extremely
popular fund that follows the S&P Retail Select Industry
Index. Assets under management for this product are over $1
billion while volume comes in the several million share mark on a
The product is also cheap, charging investors just 35 basis
points a year in fees, despite using an equal weight methodology
on just less than 100 firms. This means that no single company
dominates the risk return profile of XRT, and that large caps
account for just under 25% of the total portfolio.
iShares Dow Jones US Regional Bank ETF (
Banks could be well-positioned to be a winner in the second
half as well. That is because these securities could benefit from
a steeper yield curve as they can make more money off a wider
spread between long and short term rates.
However, not every bank will benefit equally from this
situation, as many have global operations that could be impacted
by international woes. For this reason, a focus on regional
banks-which zero in on domestic clients-could be better picks at
One way to target regional banks is with iShares' IAT, an ETF
that follows the Dow Jones US Select Regional Banks Index. This
produces a fund that holds about 60 companies in its basket,
charging a 46 basis point expense ratio per year (also see
A Steeper Yield Curve Makes These ETFs
The ETF is somewhat concentrated though, as
take up nearly 30% of the fund, followed by a 7% allocation to
. Still, the ETF has been a solid performer despite the overall
turmoil, and its banks as represented by the
major regional banks Zacks Industry
has an industry rank in the top 25% suggesting it is well
positioned for earnings season.
PowerShares DB US Dollar Bullish Fund (
If global markets continue to struggle, investors will likely
put their capital to work in the world's safe haven, the U.S.
This could be especially true in emerging markets where political
strife is rocking nations like Brazil and Egypt, forcing many to
reevaluate their holdings in these volatile nations, and boost
prospects for the U.S. dollar.
Beyond that, a number of other nations are engaged in easing
campaigns, weakening their currencies against the dollar. Add
these two together and you have a pretty bullish case for the
greenback in the second half of 2013.
Investors can go long in the dollar against a basket of global
currencies by buying up UUP from PowerShares. This ETF gives
exposure to the dollar against a variety of developed market
currencies including the euro, yen, British pound, Canadian
dollar, Swedish krona, and the Swiss franc (read
3 Currency ETFs Hit Hard By Taper Talk
The fund is a bit pricey though, as expenses come in at 80
basis points a year, though it should be noted that volume is
pretty solid at just over one million shares a day. While this
ETF will likely be much less volatile than its peers on the list,
it remains a solid choice to play off some of the global factors
that are afflicting many of the dollar's main competitors.
Although there has been some volatility in the U.S. market
lately, it pales in comparison to what investors have seen in
stocks around the globe. Securities in foreign nations-be they
developed or emerging-have experienced heavy losses and may be
worth avoiding for the time being.
Given this reality, investors should stay focused on the
domestic market, playing sectors that are dependent on the U.S.
for their performance. These securities could be well positioned
in the second half, and may outperform their global peers in the
process once more.
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ISHARS-US RG BK (IAT): ETF Research Reports
PNC FINL SVC CP (PNC): Free Stock Analysis
US BANCORP (USB): Free Stock Analysis Report
PWRSH-DB US$ BU (UUP): ETF Research Reports
SPDR-SP RET ETF (XRT): ETF Research Reports
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