There's been some progress on the global economic scene, but it all starts in the US for 2013, observes Jim Lowell of ETF Advisor.
Looking at where we are and thinking about where we are headed, I like US multinational mega caps (they offer quality growth at still reasonable prices with a yield kicker). State Street's SPDR Dow Jones Industrial (DIA), Guggenheim's S&P 500 Pure Growth (RPG) and the iShares S&P 100 (OEF) are my mega-cap cornerstones.
I'm also interested in a mid-cap skew. Real companies, real earnings, real management, real track records through recession and recovery, with enough pricing discrepancies to create values in the hands of informed investors makes the mid-cap camp attractive, with my preferred pick being the Guggenheim S&P 400 Mid Cap Pure Growth (RFG).
Europe & Japan
Unlike our resolute avoidance of
Europe in 2012, for 2013 I'm increasing our stakes in ETFs that can bottom fish
there but have the wisdom to know that bottom fishing can become a bottomless
pursuit if policy risks there and here take a turn for the worse.
Depending upon how the fiscal cliff snafu pans out, 2013 may start out looking like a falling souffle for any international play. But, unloved and overlooked are two key ingredients to my contrarian interests in general and in Europe specifically in 2013. Japan fits this bill, too, with an upside potential of a government interested in driving down the value of their currency in order to stimulate exports of their goods and services.
But I don't need or want to own either outright, except in my Long/Short portfolio or my ratings-based Global Quant portfolio; otherwise, each will be well represented across the boards of our multinational oriented portfolios.
Emerging Markets & Asia
I think that pessimism over
Europe, China, and the emerging markets may not yet have peaked, but the
ever-tumultuous emerging market nooks and crannies are nevertheless attractive
enough to pursue so long as you're in the right ETFs.
The theme of growing global consumers has me more bullish about the long-term prospects for emerging market stocks and bonds than most. (I may be wrong.) Not that I don't think many companies and even some countries are too far ahead or behind the story lines (from valuations to expectations). My tactical pairing of emerging market stock and bond ETFs (that blends the stocks and bonds not just of some of the more mature EM marketplaces but also the under-researched frontier ones) continues to make sense.
Sectors
In 2013, healthcare-via the PowerShares
Dynamic Healthcare Sector (PTH)
and the iShares S&P Global Healthcare Sector Index Fund (IXJ)-remains
the core sector investment (about as far a cry from a "bet" as a stock investor
can make) across our portfolios. I like the prospects of 40 million new health
care consumers here in the US, the aging demographic trends throughout the
world, and the increasing demand for healthcare in the emerging markets.
Related Reading:
Bullish on America? This Is Your ETF
This ETF Has a Solid Foundation
