Market Overview

ETFs Shrugging Off The Selling (DHS, SMH, IGF, INTC)

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As money rotates out of some of the hottest sectors of 2013, not all ETFs are falling victim to profit-taking and sector rotation.

There are a handful of ETFs that have been able to avoid the recent pickup in selling and have shown above-average relative strength.

If the selling continues for a couple of weeks, there is a good probability that the strong ETFs could continue to outperform their peers.

Three such ETFs that are about as different as can be are listed below.

The Wisdomtree Equity Income ETF (NYSE: DHS) tracks a fundamentally weighted index of 406 stocks that pay some of the highest dividend yields.

All stocks are based in the U.S. with the highest concentration in the financials (19 percent), consumer staples (14 percent), and health care (14 percent). Bellwether stocks Microsoft (NASDAQ: MSFT), AT&T (NYSE: T), and Johnson & Johnson (NYSE: JNJ) are the top three holdings accounting for 13 percent of the allocation.

See also: Buying Into Oversold ETFs

Over the last 12 months the ETF is up 10 percent and is currently trading at the best since December 2007. The dividend yield on the ETF is 3.4 percent.

The Market Vectors Semiconductor ETF (NYSE: SMH) is a surprise ETF on the list considering the widespread selling throughout the majority of the technology sector.

The basket of 26 holdings hit the highest level in a decade this week led by a breakout in the ETFs largest holding, Intel (NASDAQ: INTC). The other semiconductor ETFs have not held up as well and that has to do with SMH boasting a 19 percent allocation in INTC. As goes INTC, so goes SMH in the last couple of weeks.

The iShares S&P Global Infrastructure Index ETF (NYSE: IGF) is trading at its best level since September 2008 led by a plethora of international stocks. With only 31 percent of the portfolio invested in the U.S., both Europe and Asia play an important role in the performance.

There is 40 percent in both the utilities and industrials with another 20 percent in energy stocks. Due to the ETFs exposure to the utilities it boasts a 3.5 percent dividend yield that attract income-seeking investors.

All three ETFs have been outperforming for specific reasons, but in general investors are looking for both yield and perceived safety as soon as the selling starts to hit the overall markets.

Matt McCall is the editor of ETF newsletter MarkETForce available at marketfy.com
 

Posted-In: Sector ETFs Dividends Trading Ideas ETFs Best of Benzinga

 

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