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