Niche ETFs To Diversify A Portfolio

The market is currently in the midst of one of the most impressive rallies in recent history. With that said, now is a great time to consider some niche ETFs. They provide a specific aspect to a portfolio by concentrating on a single industry, while at the same time providing diversification by encompassing a number of companies in that given industry.

Highlighted below are a number of niche ETFs that have showed strong chart characteristics of late.

Global X Funds

The Global X Funds LIT tracks 35 publicly traded companies that are involved in the exploration, mining or the production of lithium batteries. The top individual holdings include:

FMC Corp FMC with a 16.6 percent holding

Rockwood Holdings, Inc. ROC making up 14.1 percent of the portfolio

Sociedad Quimica y Minera de Chile (ADR) SQM coming in at 9.5 percent The Guggenheim Solar ETF TAN is another niche ETF that seems to have found a bottom. The ETF follows 29 publicly traded companies across seven countries that are involved in the solar industry. The top individual holdings include:

Hanergy Thin Film Power Group Ltd making up 10.4 percent of the ETF

Sunedison Inc SUNE with a 9.8 percent holding

First Solar, Inc. FSLR at 8.3 percent The Cambria ETF TrustSYLD consists of 103 publicly traded companies with market caps greater than $200 million that rank among the highest in paying cash dividends, engaging in net share repurchases and paying down debt on their balance sheets. The top holdings include:

Southwest Airlines Co LUV with a 1.6 percent holding

Frontier Communications Corp FTR making up 1.4 percent of the ETF

Conversant Inc CNVRcoming in at 1.4 percent as well

LIT has started to rally after hitting a 14 month low, and looks to be gaining some momentum. The recent move higher has the ETF trading at the best level in over a month. The ETF is down 4 percent over the last 12 months and 6 percent over the last six months. The ETF has an expense ratio of 0.75 percent.

Related Link: Global X Launches Two New Rules-Based ETFs

Guggenheim Solar ETF

The solar ETF is down 16 percent over the last 12 months and 13 percent over the last six months. However it is attempting to hold a double bottom at the $33 area and could be setting up for a bounce. TAN has an expense ratio of 0.76 percent.

Cambria ETF Trust

Related Link: New Active ETF Seeks To Capture Global Momentum

SYLD is up 9 percent over the last 12 months and is 5 percent over the last six months. The ETF is now testing its 52-week high set in early September. A close above $31.65 would be a breakout and potential buy signal. The ETF has an expense ratio of 0.59 percent.

With the year coming to an end, it may be a good idea to add some niche ETFs to a portfolio to diversify as money is rotating between sectors before 2015 begins.