New 52-week highs often tell us a great deal about the type of ETF assets that the public demands. When a wide variety of stock ETFs make the list, there’s a good chance that investors are embracing risk. When investment-grade bond ETFs steal the show, investors may be avoiding “trouble” altogether.
In the current environment, however, it’s not as simple as “risk on, risk off.” For example, a number of single-country ETFs from Asia and Latin America are reaching peaks on a year-over-year basis, but regional emerging market ETFs have yet to break out completely. What’s more, on the domestic front, conservative stock ETFs like high-yielding Utilities ETFs are the winners in the developed market space. This hardly suggests confidence in equities clear across the board.
In addition, ETFs for higher yielding domestic bonds and higher yielding preferred shares continue to dominate. This likely demonstrates an appetite for income rather than a thirst for capital appreciation.
ETFs hitting new YOY highs primarily fall into these 5 clusters:
|ETFs Hitting New 52-Week Highs On 9/9/2010|
|Vanguard Telecom (VOX)|
|iShares DJ Telecom (IYZ)|
|Telecom HOLDRs (TTH)|
|Rydex Equal Weight Utilities (RYU)|
|Utilities HOLDRs (UTH)|
|First Trust Utilities (FXU)|
|iShares High Yield Corporate Bond (HYG)|
|SPDR Capital High Yield Bond (JNK)|
|iShares S&P Preferred Stock (PFF)|
|iShares Thailand (THD)|
|iShares Malaysia (EWM)|
|iShares Singapore (EWS)|
|iShares Chile (ECH)|
|iShares Peru (EPU)|
|Market Vectors Small Cap Brazil (BRF)|
Buying ETFs on the “New 52-Week Highs” list shortly after they’ve pulled back can be an exceptionally potent practice. In fact, coupling emerging market growth with developed market income has been remarkably powerful since May.
Granted, nobody wants to be caught buying at the absolute top. That said, the ETFs above may be worthy contenders for your new money. There’s a great deal of research to suggest that you will capture momentum gains if… during an uptrend… you buy ”high” and sell “higher.”
Disclosure Statement: Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc, and/or its clients may hold positions in the ETFs, mutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationships.