After an amazing 2013, markets are experiencing a bit of a
hangover to start the New Year. Worries about the taper along with
sluggish economic data-including weakness in both the manufacturing
and jobs segments-has pushed stocks sharply lower. In fact, broad
markets have fallen by about 5% on the year, erasing much of the
strength that investors had seen to end 2013.
Yet while many segments have fallen with the broad markets, a few
have shown impressive resiliency, and are actually still up on the
year. These segments may thus prove to be solid picks for investors
seeking a respite from the market's current storm, and they could
also be great choices for the rest of the year if more turbulence
hits the market (see
the Top Ranked ETFs here
Below, we highlight three such segments-and ETFs to track
them-which have not only survived the current market slump, but
have actually prospered as well. These funds might have flown under
your radar until now, but with their solid performances in what has
otherwise been a poor market environment, they could now deserve a
place on your watchlist:
Despite the downturn, growing segments of the market are still very
much in demand. And given some of the recent health care law
changes, this is particularly true for the biotech space, as any
new drugs look likely to see a huge market, while the potential for
M&A activity remains extremely high.
There are a number of ways to play this trend, but the
First Trust NYSE Arca Biotechnology Index Fund (
is a great choice. This product receives a top Zacks ETF Rank #1
(Strong Buy), and even with Monday's slump it is easily beating out
the S&P 500 over the past month (also see
Biotechnology ETF Investing 101
This product may be a better choice for investors as it is a nice
mix between market cap levels thanks to its equal weight method.
This puts 50% into the large cap space, making the fund a higher
risk choice, but also a biotech that has some stability attached to
it, an interesting combination in today's market environment.
Concerns over soaring rates really hit the real estate market hard
last year, and especially so in the mortgage REIT space. This
segment is usually highly leveraged and increases in rates can have
a devastating impact, which is why the recent move lower in
benchmark rates benefited this space so much.
One way to play this trend is with the
Market Vectors Mortgage REIT Income ETF (
which is up almost 4.3% in the past month. The fund, which follows
the Market Vectors Global Mortgage REIT Index, also pays out a
30-Day SEC yield approaching 9.8%, so it is a great income
destination as well (see
all the Real Estate ETFs here
The product is a bit concentrated in its top names, and it
was really hit hard in 2013, losing more than 15% on the year.
Still, if rates stabilize near historic-lows this could be an
interesting play, especially given the near double-digit yield.
Preferred stock are known for their stability as they have
both debt and equity characteristics. They also pay out relatively
high yields, so when yields are slumping and risks are piling on,
they can attract a great deal of investors.
This has certainly been the case as of late, and it is why
investors might 'prefer' a fund like the
PowerShares Preferred Portfolio (
in their portfolios. This fund tracks a benchmark of just under 200
preferred stocks, focusing on financials for exposure (see
Time for Preferred Stock ETFs?
The fund does a decent job of spreading out assets, as no single
security makes up more than 4.2% of the total assets. The yield is
also pretty impressive as the 30-Day SEC payout comes in at nearly
Memories of 2013's market surge are largely disappearing into
investors' rearview mirrors, as worries over the taper and poor
jobs and manufacturing data dominate the landscape. A solid
earnings season hasn't been able to stop the slide either, and many
segments are well into the red to start 2014 (see
Best ETF Strategies for 2014
However, despite the broad gloom, there are a few market segments
that have been able to post decent returns to start the year. These
have proven to be quite resilient, and thus for investors seeking
safety, they might be solid picks to wait out more choppiness in
the broad markets, especially if February follows January lower.
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Author is long MORT
FT-AMEX BIOTEC (FBT): ETF Research Reports
MKT VEC-MTGE RE (MORT): ETF Research Reports
PWRSH-PFD PORT (PGX): ETF Research Reports
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