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Top Performing Sector ETFs of 2011

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Sectors, dividends and ETFs could be the new gold, frankincense and myrrh based on performance over the past year.

Tom LydonWith time running out on 2011, AdvisorOne contributor Tom Lydon (left), CEO of ETF advisory firm Global Trends Investments, says the best performers in sector exchange traded funds this year track industries known for dividends and some insulation from economic cycles. According to Lydon, they include utilities, pharmaceuticals/biotechnology and consumer staple ETFs.

“Utilities Select Sector SPDR Fund (NYSEArca: XLU) is up 14.2% year to date while the S&P 500 has gained 0.9%, according to Morningstar,” Lydon wrote Monday on Yahoo! Finance. “The fund has a dividend yield of 4.2%. Other ETF options for the sector include Vanguard Utility Sector ETF (NYSEArca: VPU) and iShares Dow Jones U.S. Utilities Index (NYSEArca: IDU).”

In the biotech/pharmaceutical sector, Lydon pointed to the iShares Nasdaq Biotechnology (NasdaqGM: IBB) is up 14% over the past 12 months. Also, he noted Gilead Sciences (Nasdaq: GILD) paid $11 billion for the hepatitis C drug maker Pharmasset Inc. (VRUS), and the deal lifted the biotech ETF.

Lastly, consumer staples sector ETFs have also had a fair run in 2011 with investors favoring defensive sectors, according to Lydon.

“Not only do these stocks offer some yield, they play defense well. SPDR Consumer Staples Select Sector Fund (NYSEArca: XLP) has gained about 16% over the past 12 months,” he said.

In a related story, Fidelity announced it is hosting a series of conference calls on sector funds and portfolios that began on Thursday and are running through Dec. 20. According to the company, Fidelity Select Portfolio fund managers will discuss the investment themes they feel will be most important across 10 market sectors in 2012 and beyond.

And S&P chief equity analyst Sam Stovall and S&P Capital IQ biotech and consumer staples analysts discuss ETF trends for 2011 and 2012 in a free web seminar on Dec. 14.

Read about ETF Trends and RIA Database’s free Virtual ETF Summit coming on Jan. 10 at AdvisorOne.


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