As the first-quarter earnings season continues to heat up, more casualties are likely. Some sectors of the market are better positioned than others to survive, but here are three sector-focused ETFs currently in the line of fire.
A Shaky Foundation
Real estate has been a focus of the economic storm for some time. It comes as little surprise that the SPDR Dow Jones Wilshire REIT ETF (NYSE:RWR) now sits 55.8% below its trading price a year ago. This ETF holds 80 stocks and has exposure to commercial, residential and healthcare REITs.
Simon Property Group (NYSE:SPG), which accounts for 8.4% of the fund’s net assets and is its largest component, has said it has been compelled to significantly cut back its development spending. However, the company’s 2008 funds from operations (FFO) actually increased 8.8% on a per-share basis when compared to 2007.
Pressure on occupancy rates and earnings are still likely to plague many names in this fund. Dividend cuts and forecast revisions could also be forthcoming. This earnings season should tell us how much rebuilding lies ahead for this ETF. (For more, see The Risks Of Real Estate Sector Funds.)