2013 was obviously a great year for the markets, as a better economic outlook propelled stocks sharply higher. Pretty much every sector was in the green for the time frame, leading to high hopes for the New Year.
However, the start of 2014 hasn’t been too kind to investors, thanks to the weak jobs numbers, earnings worries, and concerns over bond rates. These issues have kept a lid on market returns in the first half of January, and have led some investors to worry if this year will fall flat.
While it is still way too early to tell, it is important to note that a few market segments are still soaring, and appear well positioned for further gains this year as well. That is because they are zeroing in on some of the strongest stories in the current economic environment, and do look to have strength later on in the year too (see Best ETF Strategies for 2014).
Below, we highlight three sectors that have outperformed to start the year and could be poised to beat out the market in 2014. And best of all, each member of the trio has a top Zacks ETF Rank, further underscoring their potential to outperform this year. So before you panic about the slow start, consider any of the following funds as ways to get through this January market slump in great shape:
First Trust Industrials/Producer Durables AlphaDEX Fund (NYSEARCA:FXR)
Thanks to strong automobile demand, and an increasingly healthy manufacturing sector, the industrial segment has been outperforming the broad market to start the year. Plus, this relatively cyclical corner of the market has been easily outperforming the S&P 500 over the past six months too, suggesting it has strong momentum.
While broad plays may offer solid exposure to the surging U.S. manufacturing and production sector, FXR and its use of First Trust’s AlphaDEX methodology could be a winning way to go. That is because this approach evaluates stocks on a number of criteria, only selecting the best companies for inclusion in the index.
The approach does help avoid a market weighted approach, though it does add to total costs. This has clearly been a winning strategy though, as the fund has added about 3.2% so far in 2014, while it has gained roughly 22.8% in the past six months, enough to put it well ahead of the more popular XLI for both time frames.