ETFs: The Very Strongest Sectors and Countries Right Now …

Nilus Mattive:  Last week, I shared a recent stock screen I conducted … and I commented on some of the specific companies that it turned up. Today, I want to continue looking at the stock market, but from a much broader perspective.

Let’s start with one of my favorite topics …

How the Various Stock Market Sectors Are Performing!

Back in February, I told you how each of the market’s ten major groups had done in 2010. And I also made some predictions about which areas would be strongest this year.

Specifically, I said that income investors should pay particular attention to health care (especially pharmaceutical stocks!).

So far this year, that has proven to be dead on. In fact, through the end of April, health care (NYSE:XLV) was the second-best sector in terms of performance.

Meanwhile, energy (NYSE:XLE) — my favorite out of 2010′s strong performers — is in the lead so far. And consumer staples stocks — another one of my perennial income favorites — have also been performing very well year to date.

Take a look …

Best Market Sectors

Obviously, there’s still plenty of time for new trends to emerge … and the current winners can reverse course at any time … but if anything, I think defensive sectors like staples and health care will only do BETTER throughout the rest of this year.


Because based on some of last week’s data — including tepid ISM data and a renewed rise in the nation’s unemployment rate — more investors will start re-considering their current strategies and naturally gravitate back toward recession-resistant companies.

Of course, it was that very same risk of renewed U.S. economic weakness — as well as a falling dollar — that has also caused me to beat the drum on foreign dividend payers in recent columns, too.

So let’s also take a quick look at …

Which Countries Have Been Performing Most Strongly So Far This Year!

Most professional investors break up foreign markets into those that are “developed” and those that are “emerging.”

And while these definitions are certainly malleable — and becoming even more malleable as the world’s balance of economic power continues to shift — here’s a standard breakdown of the very best developed markets so far this year (through April) …

Best Developed Markets

Interestingly enough, places like Australia (NYSE:EWA) and the U.K. were farther down the list — producing gains of 10.09 percent and 8.52 percent, respectively.

And the United States? It was also in the middle of the pack with a 9.01 percent rise.

Perhaps the biggest shock comes when you look at the best-performing emerging markets, however. Here are the top five performers through April …

Best Emerging Markets

As you can see, past darlings like China (NYSE:FXI) and Brazil (NYSE:EWZ) were nowhere near the top … with results of 1.94 percent and -0.55 percent, respectively.

Heck, Indonesia (NYSE:IDX) was the only Asian country to make the top 5! How different things look today versus a year or two ago, eh?

None of this is predictive, of course. In fact, I’ve become more positive on China now that other investors have turned their backs on it. [Editor’s note: Nilus is currently recommending two Chinese dividend stocks for his Dad’s Income Portfolio.

But that brings up a good question …

How Can You Play These Kinds of Sector and Country Trends?

Personally, I continue to favor individual dividend stocks.

When it comes to the ten sectors of the U.S. stock market, there are income-producing shares to be found in every single one … and by choosing the very best companies you can get great capital appreciation as well as solid checks in the mail.

Plus, the proliferation of dividend-paying American Depositary Receipts (and Shares) has also made it possible to buy many top-quality international companies right here on U.S. exchanges, too.

At the same time, I recognize that you may not be interested in picking single stocks to buy … nor are there a lot of ADRs available from companies operating in the more obscure countries.

That’s okay. You can still use exchange-traded funds (ETFs) to target just about whatever sector or country you want. Like mutual funds, ETFs can give you solid diversification … they trade like regular stocks … and as long as you choose wisely, the expenses will be quite low. Heck, companies like WisdomTree even offer ETFs expressly focused on dividend-paying foreign stocks!

But whichever way you decide to go, I do encourage you to continue following these larger trends if you want to get the very best performance out of your own portfolio. In these fast-moving markets it’s absolutely critical to find the very best combination of growth and value.

Best wishes,

Written By Nilus Mattive From Money And Markets

Money and Markets (MaM) is published by Weiss Research, Inc. and written by Martin D. Weiss along with Nilus Mattive, Claus Vogt, Ron Rowland, Michael Larson and Bryan Rich. To avoid conflicts of interest, Weiss Research and its staff do not hold positions in companies recommended in MaM, nor do we accept any compensation for such recommendations. The comments, graphs, forecasts, and indices published in MaM are based upon data whose accuracy is deemed reliable but not guaranteed. Performance returns cited are derived from our best estimates but must be considered hypothetical in as much as we do not track the actual prices investors pay or receive. Regular contributors and staff include Andrea Baumwald, John Burke, Marci Campbell, Selene Ceballo, Amber Dakar, Maryellen Murphy, Jennifer Newman-Amos, Adam Shafer, Julie Trudeau, Jill Umiker, Leslie Underwood and Michelle Zausnig.

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