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Top 5 Sector ETFs To Invest In Right Now

|Includes:KIE, XAR, XBI, XOP, SPDR S&P Transportation ETF (XTN)

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Top 5 Sector ETFs to Invest in Right Now by Profits Run

Many long term buy and hold investors have been conditioned to be satisfied with returns that mirror the market averages over the long term. These investors hold on to the hope that at the end of their lives, their investments will show positive returns. In the meantime, traders are making and losing millions using what the buy and hold crowd refer to as risky strategies. But what if they weren't really that risky?

What if you invested in the strongest, fastest growing stocks when the market was going up and in the safest stocks, or no stocks at all, when the market was going down? That sounds like a perfect strategy, but picking individual stocks is far too risky, right?

The compromise between the risk of buying individual stocks and the lack of control that most buy and hope strategies offer can be found in sector based ETFs. These funds allow you to put your money to work in the most productive places, yet still provide the diversity of investing in many companies at the same time.

The S&P 500 is generally considered to be the index that best gives the broad picture of the general market. It is up 2.4% over the past month, which is great! What if you could have done better?

Here are the top five performing SPDR Sector ETFs over the past month:

SPDR S&P Transportation ETF (NYSEARCA:XTN) - 7.5%

Transports have been cruising higher since the beginning of the year, and they have really taken off in the past three weeks. It is often said that the Transports are a leading indicator for the economy, so even if this trend doesn't last, it can be a positive sign that jump starts other sectors.

If you had owned this transportation ETF over that past month, you would have done three times better than the general market. This is important to keep in mind when reviewing performance. Just because a number is good, doesn't mean that it couldn't be better.

The transports are a very broad sector. They are currently being led higher by airlines like Delta (NYSE:DAL) and Alaska Air (NYSE:ALK) as well as car rental companies like Hertz (NYSE:HTZ) and Avis (NASDAQ:CAR). These industries have been very hot lately.

SDPR S&P Aerospace / Defense ETF (NYSEARCA:XAR) - 6.4%

After trading very tightly over the first two and a half months of the year, the aerospace/defense stocks have really started to take off in the past few week. This group contains stocks like Honeywell (NYSE:HON), Transdigm (NYSE:TDG), B/E Aerospace (NASDAQ:BEAV), and United Technologies (NYSE:UTX).

Aerospace/Defense is another sector that has performed almost three times better than the S&P 500 over the past month. By simply noticing this performance, you could have seen this trend developing and made significantly more than the general market during this uptrend.

SPDR S&P Oil & Gas Exploration ETF (NYSEARCA:XOP) - 6.0%

The Oil & Gas Exploration sector could be just getting started on a major move after jumping the past few weeks. The sector had been consolidating when it tried to break out in early February, but then suffered three straight down weeks. Since then, it has put in two very strong up weeks and appears to be ready to head higher.

If you owned the Oil & Gas Exploration ETF over the last month, you would be up 6.0% on the position. Again, this is much better than the general market has done. Some of the stocks pushing this sector higher include PDC Energy (NASDAQ:PDCE), Delek US Holdings (NYSE:DK), Valero Energy (NYSE:VLO), and Marathon Petroleum (NYSE:MPC).

SPDR S&P Insurance ETF (NYSEARCA:KIE) - 4.8%

The Insurance sector has only had one down week this entire year. It has been one of the strongest sectors all year, returning 16.9% year to date. In the past month, the Insurance sector is up 4.8%, making its performance double the performance of the S&P 500. It is currently being led higher by stocks like Assured Guaranty (NYSE:AGO), Genworth Financial (NYSE:GNW), and Progressive (NYSE:PGR).


Despite pulling back a bit last week, the Biotech sector is still way up on the year with a big chunk of that coming two weeks ago. The sector is up 4.7% over the past month and 13.7% year to date. Four of the stocks pushing this sector higher are Isis Pharmaceuticals (ISIS), Pharmacyclics (NASDAQ:PCYC), Incyte (NASDAQ:INCY), and Celgene (NASDAQ:CELG).

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