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2024&#39;s Top Sectors For A Soft Landing: 3 Industries Leading The Way

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iShares Trust Dow Jones US Basic Materials Sector Index Fund

Material ETFs In Focus On DowDuPont&#39;s Mixed Q3 Results

2023 was a good year for the stock market, as the broad market S&amp;P 500 Index, and ETFs tracking it such as the SPDR S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>), the iShares Core S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IVV#NYSE">IVV</a>) and the Vanguard S&amp;P 500 ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VOO#NYSE">VOO</a>) ending the <a href="https://www.benzinga.com/topic/s-p-500-index">year with 25% gains</a>. 
Last year&#8217;s stock market returns were primarily driven by the Technology sector which gained over 55% on aggregate, and the Communication Services sector which rose about 50% on average. Investors are now wondering which sectors will shine in 2024.
Also Read: <a href="https://www.benzinga.com/markets/equities/24/01/36472187/soft-landing-dont-bet-on-it-just-yet-feds-barkin-indicates-further-rate-hikes-possible">Soft Landing? Don&#8217;t Bet On It Just Yet: Fed&#8217;s Barkin Indicates Further Rate Hikes Possible</a>
According to Fidelity&#8217;s sector managers, the sectors that will lead and those that will lag may depend in large part on macroeconomic considerations. If the U.S. avoids a recession and achieves a &#8216;soft landing,&#8217; the most compelling potential <a href="https://www.fidelity.com/learning-center/trading-investing/outlook-sectors">opportunities</a> for this year lie in the following cyclical sectors:
<ul>
<li>Materials</li>
<li>Industrials</li>
<li>Consumer discretionary</li>
</ul>
<h2 class="wp-block-heading">Materials</h2>
The materials sector usually aligns with the economic cycle, riding the waves of overall economic growth. Although the sector showed positive yet slow returns last year due to worries about a possible recession, historically, it has excelled during early phases of economic upswings, making it primed for potential recovery. 
Fidelity sees long-term investment potential in a number of segments of the sector that have shown favorable supply-and-demand dynamics, including among copper miners and U.S. chemical manufacturers.
The Materials sector is broadly tracked by the Materials Select Sector SPDR ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLB#NYSE">XLB</a>) and the Vanguard Materials ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VAW#NYSE">VAW</a>). 
<h2 class="wp-block-heading">Industrials</h2>
The industrial sector saw positive, but lagging returns compared to the S&amp;P 500 in 2023 due to investor focus on specific mega-cap growth stocks. Fidelity sees long-term growth in various industrial segments being fueled by investments in onshoring, infrastructure, and sustainability. 
An improved U.S. economy could provide a short-term boost. Opportunities for 2024 include commercial aerospace, utilities infrastructure, residential construction, and shipping companies within this sector. 
Broadly, the Industrials sector is tracked by the SPDR Select Sector Fund &#8211; Industrial (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLI#NYSE">XLI</a>) and the Vanguard Industrials ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VIS#NYSE">VIS</a>).
<h2 class="wp-block-heading">Consumer Discretionary</h2>
The resilience of U.S. consumers throughout 2023 notably contributed to the consumer discretionary sector&#8217;s improved performance. 
Looking ahead to 2024, Fidelity believes this sector&#8217;s trajectory might still hinge on broader factors like the economy&#8217;s health and interest rate trends. Retailers with appealing valuations and defensive business strategies, potentially shielding them from economic downturns, are the ones that could stand out.
The Consumer Discretionary sector is tracked by the SPDR Select Sector Fund &#8211; Consumer Discretionary (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLY#NYSE">XLY</a>) and the Vanguard Consumer Discretion ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VCR#NYSE">VCR</a>).
Now Read: <a href="https://www.benzinga.com/news/24/01/36528216/us-economy-set-for-soft-landing-as-economists-eye-fed-rate-cuts">US Economy Set For &#8216;Soft Landing&#8217; As Economists Eye Fed Rate Cuts</a>
Photo: Shutterstock

2024's Top Sectors For A Soft Landing: 3 Industries Leading The Way

The Armor US Equity Index ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/armr#NYSE">ARMR</a>), an exchange traded fund that debuted Tuesday, brings a refreshed view to sector investing.
ARMR offers exposure to nine of the 11 S&amp;P 500 sectors, using Vanguard ETFs, which are among the least expensive sector funds. The new follows the Armor US Equity Index.
&ldquo;Rebalanced monthly, the index provides exposure to those sectors of the US economy that score the highest using Armor&rsquo;s proprietary market performance indicator (MPI), which identifies the sectors best positioned to offer strong, long-term performance potential with lower expected downside risk,&rdquo; <a href="https://www.businesswire.com/news/home/20200211005357/en/Investors-Powerful-New-Tool-Designed-Protect-Downside">according to Armor Index</a>.
<h3>Why It&#39;s Important</h3>
Indicating that ARMR views energy and materials as weak sectors at the moment, the new ETF excludes the Vanguard Energy ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vde#NYSE">VDE</a>) and the Vanguard Materials ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vaw#NYSE">VAW</a>).
The other nine ARMR holdings are equally-weighted, led by the Vanguard Information Technology ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vgt#NYSE">VGT</a>) and the Vanguard Health Care ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vht#NYSE">VHT</a>).
&ldquo;Only the sectors that score well in the MPI are included each month, represented by using highly liquid sector ETFs. If no sector appears attractive based on the MPI&rsquo;s results, the index can shift to a focus on US Treasurys,&rdquo; according to Armor Index.
Although the new ARMR is designed to provide downside, it&#39;s current makeup provides plenty of opportunity for upside capture &ndash; assuming the bull market remains in tact &ndash; via ETFs such as VGT and the Vanguard Communication Services ETF (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/vox#NYSE">VOX</a>).
All Vanguard sector ETFs are cap-weighted.
<h3>What&#39;s Next</h3>
&ldquo;With the current bull market for US equities now in its second decade, investors are in uncharted territory. It&rsquo;s only prudent that many will be thinking about how their portfolios will respond when the inevitable downturn arrives,&rdquo; <a href="https://armoretfs.com/holdings">said Armor Index founder Jim Colquitt</a>. &ldquo;For investors, protecting against downside risk should be paramount; and for advisors, explaining to clients how you can help them protect against downside risk is going to be an important, and recurring, conversation in 2020.
ARMR charges 0.60% per year, or $60 on a $10,000 investment.
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DowDuPont Inc. <a href="http://www.zacks.com/stock/quote/DWDP">DWDP</a>, created from the merger of Dow Chemical and DuPont on Aug 31, reported mixed third-quarter results. While the company met our earnings estimate, revenues beat.
	Quick Look to Earnings
DowDuPont Inc. DWDP, created from the merger of Dow Chemical and DuPont on Aug 31, reported mixed third-quarter results. While the company met our earnings estimate, revenues beat.
	Quick Look to Earnings
	Earnings per share came in at 55 cents, matching the Zacks Consensus Estimate but increasing 10% from the year-ago earnings. Revenues climbed 7.7% year over year to $18.3 billion and surpassed our estimate of $17.5 billion (read: <a href="https://www.zacks.com/stock/news/276893/5-sector-etfs-for-revenue-growth-play">5 Sector ETFs for Revenue Growth Play</a>).
	The company remained focused on its $3 billion cost synergy target, stemming from $1 billion in Agriculture, $1.2 billion in Materials Science and $0.8 billion in Specialty Products. These cost savings are expected to generate through procurement savings, layoffs, buildings and facilities consolidation, and shutting down selected assets. Additionally, the company is in the process of integrating the three divisions and their separation into three independent companies. The breakup is expected to take place within 18 months of the merger closing.
	Market Impact
	Shares of DWDP dropped 1.7% on the day following the earnings announcement. The stock has a Zacks Rank #3 (Hold) and a VGM Style Score of A. Plus it belongs to a solid industry having Zacks Rank in the <a href="https://www.zacks.com/stocks/industry-rank/industry/chemical-diversified-34">top 26%</a>, indicating growth potential.
	Given this, ETFs having large allocation to this chemical giant will be in focus in the days ahead. The drop in DWDP shares has led to sluggish trading in these ETFs as well. Below, we have highlighted them in detail. These funds have a Zacks ETF Rank #3 (see: <a href="https://www.zacks.com/funds/etfs/etf-categories/Materials-ETFs-15">all the Materials ETFs here</a>):
	iShares U.S. Basic Materials ETF IYM
	This ETF tracks the Dow Jones U.S. Basic Materials Index and holds 50 stocks in its basket. The fund has AUM of $956.3 million and charges 44 bps in fees and expenses. Volume is good as it exchanges around 182,000 shares a day. DowDuPont occupies the top position in the basket making up for one-fourth of the portfolio. The product is heavily skewed toward the chemical segment with three-fourth of the portfolio, while industrial gases, steel, and metals &amp; mining receive minor allocation each. It lost 0.7% on the day.
	Materials Select Sector SPDR XLB
	The most-popular material ETF follows the Materials Select Sector Index. This fund manages about $4.5 billion in its asset base and trades in volumes as heavy as around 4.1 million. The ETF charges 14 bps in fees per year from investors. In total, the fund holds about 25 securities in its basket with DWDP taking the top spot, with nearly 23.2% allocation. In terms of industrial exposure, chemicals dominates the portfolio with 73.4% share while containers &amp; packaging, and metals &amp; mining round off the top three positions. XLB shed 0.7% on the day.
	Vanguard Materials ETF VAW
	This fund has amassed about $2.2 billion in its asset base and offers exposure to 118 stocks by tracking the MSCI US Investable Market Materials 25/50 Index. The ETF has 0.10% in expense ratio while volume is moderate at 88,000 shares. Here too, DowDuPont is the top firm accounting for nearly 18.1% share. Chemicals makes up for nearly three-fifths of the portfolio, while container &amp; packaging and steel offer a nice mix in the portfolio. The ETF has lost 0.6% (read: <a href="https://www.zacks.com/stock/news/272330/trump-passes-order-to-fix-us-infrastructure-etfs-in-focus">Trump Passes Order to Fix U.S. Infrastructure: ETFs in Focus</a>).
	Fidelity MSCI Materials Index ETF FMAT
	This fund provides exposure to 118 materials stocks with AUM of $273.4 million. This is done by tracking the MSCI USA IMI Materials Index. Here too, DWDP is the top two firm with 18.4% allocation. Chemicals accounts for 67.9%, while container &amp; packaging, and metals &amp; mining round off the top three spots with a double-digit exposure each. The ETF has 0.08% in expense ratio while volume is moderate at more than 56,000 shares a day. It was down 0.6%.
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Material ETFs In Focus On DowDuPont's Mixed Q3 Results

Year-to-date, the Materials Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlb#NYSE">XLB</a>) is down 7.8 percent, good for the second-worst among the nine legacy sector SPDR exchange traded funds, but XLB and rival materials ETFs could be in for some near-term relief on the back of major mergers and acquisitions news.

	After the close of U.S. markets Tuesday, the <a href="http://www.wsj.com/articles/dow-chemical-and-dupont-are-in-advanced-talks-to-merge-1449621799">Wall Street Journal</a> reported DuPont Co. (NYSE: <a class="ticker" href="/stock/dd#NYSE">DD</a>) and rival Dow Chemical Co. (NYSE: <a class="ticker" href="/stock/dow#NYSE">DOW</a>) are in merger talks described as &quot;advanced.&quot;

	DuPont and Dow Chemical are XLB&#39;s largest and second-largest holdings, respectively, combining for 23.4 percent of the $2.11 billion ETF&#39;s weight. The iShares U.S. Basic Materials ETF (NYSE: <a class="ticker" href="/stock/iym#NYSE">IYM</a>) has a combined weight of 22.4 percent to the two materials giants while the Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>) dedicated 15.7 percent of its combined weight to DuPont and Dow Chemical at the end of October.

	Related Link: <a href="http://www.benzinga.com/analyst-ratings/analyst-color/15/12/6033777/dow-chemical-dupont-shares-explode-after-mother-of-all-m">Dow Chemical, DuPont Shares Explode After &#39;Mother Of All&#39; Merger Report</a>

	A combined Dow Chemical/DuPont &quot;would create a giant with more than $90 billion in combined sales and strong positions in everything from plastics to industrial chemicals and agriculture,&quot; according to WSJ.

	Of the nearly 80 ETFs that holds shares of DuPont, none of have larger weights to the stock than XLB. Roughly 70 ETFs have exposure to Dow Chemical with XLB also boasting the largest exposure to the chemicals giant.

	Another ETF for investors keep in an eye as the Dow/DuPont marriage moves toward confirmation or a breakup is the Guggenheim S&amp;P 500 Equal-Weight Materials ETF (NYSE: <a class="ticker" href="/stock/rtm#NYSE">RTM</a>). DuPont and Dow Chemical are RTM&#39;s second- and fourth-largest holdings, respectively, combining for 9.4 percent of the ETF&#39;s weight, according to <a href="http://guggenheiminvestments.com/products/etf/details?productId=83">Guggenheim</a> data.

	News of the potential Dow/DuPont marriage comes at a time of year when materials historically perform well. In fact, XLB is usually the best-performing sector SPDR <a href="http://www.benzinga.com/trading-ideas/long-ideas/15/11/5954103/sector-etfs-for-november-time-for-laggards-to-lead">in November and December</a>. XLB is up 0.9 percent since the start of November.

Movers

Rydex ETF Trust Rydex S&P Equal Weight Materials ETF

Merger Mania For Materials ETFs

The chemicals sector has been consolidating of late, and M&amp;A can mean a premium for shareholders.

	In September Germany-based Merck KGaA announced its purchase of Sigma-Aldrich Castello Di Borghese (NASDAQ: <a class="ticker" href="/stock/sial#NASDAQ">SIAL</a>) for $17 billion in cash, a 37 percent premium to SIAL&rsquo;s closing price pre-announcement. SIAL is a manufacturer of chemicals and laboratory kits used in scientific research.

	While this consolidation trend may continue, it is very difficult to attempt to pick the specific stocks that will be taken over. A lower risk strategy is to invest in the chemicals sector through an <a href="http://www.benzinga.com/topic/etfs">ETF</a>.

	Related Link: <a href="http://www.benzinga.com/etfs/sector-etfs/14/09/4882870/encana-corporation-athlon-energy-inc-deal-a-potential-boost-to-these-">Encana Corporation-Athlon Energy Inc Deal A Potential Boost To These ETFs</a>

	Two ETFs concentrate on the materials sector, but analyzing their portfolios shows that the majority of the stocks are in the chemicals sector.
<h3>
	Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>)</h3>

	VAW seeks to track the performance of a benchmark index that measures the returns of publicly traded companies in the materials sector. It consists of 132 companies, but the top ten holdings make up just under 50 percent of the entire ETF.

	The top holdings include The Dow Chemical Company, E I Du Pont De Nemours And Co, and Monsanto Company. Approximately two-thirds of the ETF is invested in chemical stocks.

	VAW is up 19 percent of the last 12 months, and up 7 percent over the last six months. VAW has an expense ratio of 0.14 percent, beating most of its competitors.
<h3>
	Materials Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlb#NYSE">XLB</a>)</h3>

	XLB follows 32 publicly traded companies in the materials sector. <a href="https://www.spdrs.com/product/fund.seam?ticker=XLB">The portfolio</a> is distributed across five subsectors. The top two are chemicals, at 74 percent, and metals and mining at 13 percent.

	XLB has the same top holdings as VAW but in a different order; du Pont is the top holding, followed by Monsanto and Dow Chemical. XLB has performed well, up 20 percent over the last 12 months, and 7 percent over the last six months. XLB boasts a favorable 0.16 percent expense ratio.

	Both ETFs are a play on more potential mergers in the chemical sector and also offer exposure to companies that should do well during the continued stock market rally and global economic rebound.

SIAL

Merger Boosts Materials ETFs

With the S&amp;P 500 up about 0.7 percent Tuesday and having touched a new record high, it is not hard to find the laggards among sector ETFs. There are a few funds tracking the oil and semiconductor sub-segments that are in the red, but those losses are not yet alarming.

	The real cause for concern remains the materials sector. The Materials Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlb#NYSE">XLB</a>) is down 0.54 percent today, and while that may not sound like much, remember that XLB was by far the worst performer of the nine sector SPDRs in the first quarter. XLB's first-quarter gain was not even half of what the SPDR S&amp;P 500 (NYSE: <a class="ticker" href="/stock/spy#NYSE">SPY</a>) returned.

	Tuesday may be just one day, but the problem for XLB and other materials ETFs is that this far from the worst day this year these funds have been laggards. As lower beta sectors such as consumer staples and health care have lead the broader market higher, materials names have under-performed <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/04/3461115/materials-mess-these-etfs-are-in-trouble">perhaps foreshadowing imminent declines</a>.

	XLB is not the only materials ETF offender, either. As Benzinga noted on Monday, the SPDR S&amp;P Metals &amp; Mining ETF (NYSE: <a class="ticker" href="/stock/xme#NYSE">XME</a>) is in serious technical trouble. That ETF is off another 1.5 percent today and has now lost more than 16.5 percent year-to-date.

	With gold futures being hammered, the Market Vectors Gold Miners ETF (NYSE: <a class="ticker" href="/stock/gdx#NYSE">GDX</a>) and the Market Vectors Junior Gold Miners ETF (NYSE: <a class="ticker" href="/stock/gdxj#NYSE">GDXJ</a>) are both off more than three percent.

	In further proof that traders hate gold mining stocks and reverse splits are a joke, the Direxion Daily Gold Miners 3X Bull Shares (NYSE: <a class="ticker" href="/stock/nugt#NYSE">NUGT</a>) is down nearly 11 percent today, the ETF's first trading day after undergoing a four-for-one reverse split.

	There is more bad news. The iShares Dow Jones US Basic Materials Index Fund (NYSE: <a class="ticker" href="/stock/iym#NYSE">IYM</a>) is flirting with support in the $68.80 area. A break there probably takes the ETF back to $65-$66. If the Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>) cannot hold $87, it likely returns to $82.

	Another way of illustrating the dark clouds hanging over materials ETFs right now is this. Look at a heat map of inverse ETFs and exclude the ones that are trading on a post-split basis today. The noteworthy, legitimate gainer is the ProShares UltraShort Basic Materials (NYSE: <a class="ticker" href="/stock/smn#NYSE">SMN</a>), <a href="http://www.finviz.com/quote.ashx?t=smn&amp;ty=c&amp;ta=1&amp;p=d">which is close to staging a breakout of its own</a>.

	SMN is not the largest nor is it the most heavily traded inverse ETF out there. However, it is up nearly one percent on a day when the S&amp;P 500 hit a new record high and that is not a good sign for long materials ETFs.

	For more on materials ETFs, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/04/3461115/materials-mess-these-etfs-are-in-trouble">here</a>.

Short Ideas

Specialty ETFs

Technicals

Commodities

Intraday Update

Markets

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GDXJ

NUGT

Further Confirmation Materials ETFs Are Imperiled

Alcoa (NYSE: <a class="ticker" href="/stock/aa#NYSE">AA</a>), shares of which have surged about eight percent in the past week, is scheduled to report its fourth-quarter 2012 results Tuesday, January 8, after the markets close. Investors will be looking to see how much the sluggish global economy, particularly in China and in Europe, will drag on earnings. Moody's recently warned that it might downgrade Alcoa, in part due to its debt load.

Expectations

Analysts on average predict that Alcoa will report revenue for the quarter that fell more than six percent year-over-year to $5.61 billion. Per-share earnings are expected to come to $0.06, compared to a net loss of $0.03 per share in the same quarter of last year. That consensus earnings estimate has slipped in the past 60 days from $0.08 per share. Alcoa has not fallen short of earnings expectations in the past four quarters. The third quarter adjusted profit of $0.03 surprised analysts, who had expected Alcoa to break even.

Alcoa attributed the third quarter results to stronger demand for aluminum products from airplane and automobile producers. But it also posted charges for settlements with the Environmental Protection Agency and a joint venture partner in Bahrain, and it lowered its aluminum demand expectations for the fourth quarter, largely due to China's economic slowdown. The share price pulled back almost five percent in the week following the third-quarter report.

The analysts' consensus full-year forecast calls $0.24 per share earnings on revenue of $23.36 billion. That compares to $0.72 per share and $24.95 billion in the previous year. That consensus EPS estimate has declined in the past 60 days from $0.26.

The Company

Alcoa is the world's third largest producer of aluminum. The company operates in four segments: Alumina, Primary Metals, Flat-Rolled Products, and Engineered Products and Solutions. This S&amp;P 500 and Dow Jones Industrial Average component has a market capitalization near $9.9 billion and its operational headquarters are in Pittsburgh. Klaus Kleinfeld has been the chief executive since May 2008.

Alcoa's two larger competitors are privately held Rio Tinto Alcan and RUSAL. It also competes with Aluminum Corporation of China (NYSE: <a class="ticker" href="/stock/ach#NYSE">ACH</a>). The latter is expected to report net losses for the fourth quarter and the full year.

During the three months that ended in December, Alcoa sent its first shipment of alumina to a new joint venture-run facility in Saudi Arabia, completed the sale of a hydroelectric project located in Tennessee and opened an aluminum wheel facility in China.

Performance

Alcoa's long-term EPS growth forecast is more than 10 percent, and the forward earnings multiple is less than the industry average price-to-earnings (P/E) ratio. The operating margin is greater than the industry average, but the return on equity is in negative territory. The number of shares sold short is more than six percent of the float, the highest it has been since the end of October.

Only six of the 19 analysts surveyed by Thomson/First Call who follow the stock recommend buying shares; 10 of them recommend holding shares. However, the analysts believe the stock has some room to run as their mean price target represents almost 11 percent potential upside. But that target price is less than the 52-week high from early last year.

Shares flirted with the 52-week low in mid-November, but they have risen about 15 percent since then. As previously mentioned, the share price jumped about eight percent in the past week. It crossed above the 200-day moving average for the first time since September. Over the past six months, the stock has underperformed Aluminum Corp. of China, but its performance has been in line with the DJIA.

ACTION ITEMS

Bullish: Investors interested in exchange traded funds invested in Alcoa might want to consider the following trades:

<ul><li>iShares Dow Jones U.S. Basic Materials (NYSE: <a class="ticker" href="/stock/iym#NYSE">IYM</a>) is almost nine percent higher than a month ago.</li>
<li>Materials Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlb#NYSE">XLB</a>) is about eight percent higher than a month ago.</li>
<li>Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>) is about seven percent higher than a month ago.</li>
</ul>

Bearish: Traders may prefer to consider these alternative positions in the same sector:

<ul><li>Alpha Natural Resources (NYSE: <a class="ticker" href="/stock/anr#NYSE">ANR</a>) is up more than 29 percent in the past month.</li>
<li>Cliffs Natural Resources (NYSE: <a class="ticker" href="/stock/clf#NYSE">CLF</a>) is up more than 28 percent in the past month.</li>
<li>Companhia Siderurgica Nacional (NYSE: <a class="ticker" href="/stock/sid#NYSE">SID</a>) is up more than 20 percent in the past month.</li>
<li>Vale (NYSE: <a class="ticker" href="/stock/vale#NYSE">VALE</a>) is up almost 18 percent in the past month.</li>
</ul>

Previews

Analyst Ratings

VALE

Alcoa Earnings Preview: Lower Fourth-Quarter Revenue Expected

Despite signs of slowing growth in some emerging markets, there are also signs the U.S. economy is rebounding and China has delivered plenty of signals in recent weeks that is experiencing a turnaround of its own. That could be just one of the catalysts to lift materials ETFs in 2013, though S&amp;P Capital IQ has a Neutral view of the sector.

"We foresee monthly PMI data for each of the major economies, including China, continuing to show improvement as the year progresses. In addition, EPS growth in the fourth quarter of 2012 for this S&amp;P 500 sector is expected by Capital IQ consensus estimates to be 3.9% and exceed that for the S&amp;P 500. In 2013, earnings are expected to be similarly strong. Finally, our technical outlook has been raised to neutral with a bullish bias, from neutral with a bearish bias," S&amp;P Capital IQ said in a recent research note.

The research firm is somewhat bullish on diversified chemicals firms, which could favor an ETF such as the iShares Dow Jones U.S. Basic Materials Sector Index Fund (NYSE: <a class="ticker" href="/stock/iym#NYSE">IYM</a>).

"Fundamentals for diversified chemicals, the largest sub-industry in the sector, are positive, according the S&amp;P Capital IQ equity analysts. We think the decline in U.S. natural gas prices relative to global crude oil prices has improved the feedstock cost competitiveness of the U.S. petrochemical industry versus other global regions, such as Europe, thus helping boost U.S. industry exports," said S&amp;P Capital IQ.

IYM, which is home $543.4 million in assets under management, features Dow component DuPont (NYSE: <a class="ticker" href="/stock/dd#NYSE">DD</a>), Dow Chemical (NYSE: <a class="ticker" href="/stock/dow#NYSE">DOW</a>), Air Products &amp; Chemicals (NYSE: <a class="ticker" href="/stock/apd#NYSE">APD</a>) and other chemicals names among its top-10 lineup. S&amp;P rates IYM as Marketweight. The ETF has an annual expense ratio of 0.47 percent.

S&amp;P Capital IQ also has a Market-weight rating on the Vanguard Chemicals ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>). Due to a recent <a href="http://www.benzinga.com/markets/bonds/12/12/3201733/vanguard-trims-fees-on-sector-etfs">fee reduction announced by Vanguard</a>, VAW now has the lowest expense ratio of any materials ETF at 0.14 percent per year. VAW allocates 19.3 percent of its weight to diversified chemicals names, though its largest holding is crop nutrients maker Monsanto (NYSE: <a class="ticker" href="/stock/mon#NYSE">MON</a>).

S&amp;P is also bullish on diversified metals and mining names. The firm said its "equity analysts have a positive fundamental outlook for the next 12 months, as we believe sales and earnings will recover from 2012's depressed levels. Our expectation reflects our view that prices for aluminum, copper, nickel, zinc, iron ore and coking coal will rebound from 2012's levels on higher demand and less rapidly rising output."

The research firm has a Market-weight rating on the Materials Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlb#NYSE">XLB</a>). That $2.55 billion ETF is includes mining names such as Freeport-McMoRan (NYSE: <a class="ticker" href="/stock/fcx#NYSE">FCX</a>) and Newmont Mining (NYSE: <a class="ticker" href="/stock/nem#NYSE">NEM</a>) along with Monsanto and DuPoint among its top holdings. 

S&amp;P is less enthused about the SPDR S&amp;P Metals and Mining ETF (NYSE: <a class="ticker" href="/stock/xme#NYSE">XME</a>), which it rates Underweight. With steel stocks such as U.S. Steel (NYSE: <a class="ticker" href="/stock/x#NYSE">X</a>) and Nucor (NYSE: <a class="ticker" href="/stock/nue#NYSE">NUE</a>) accounting for over 36 percent of XME's weight, the ETF carries a high beta of 1.67 and is highly dependent on a strong economies in the developed and emerging worlds to drive its returns. Investors should also note XME has an almost 15 percent to beaten down coal and consumable fuels names.

For more on materials ETFs, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/13/01/3213526/an-unheralded-sector-etf-for-china-exposure">here</a>.

Futures

Events

Global

Econ #s

Pre-Market Outlook

S&P Lukewarm on Some Materials ETFs

On the heels of a pre-Christmas announcement that saw the firm, lower fees on a variety of bond and broader market equity ETFs, Vanguard said today it will lower fees on its 10 sector ETFs. The news is significant because prior to today, State Street's (NYSE: <a class="ticker" href="/stock/stt#NYSE">STT</a>) State Street Global Advisors unit, the second-largest U.S. ETF sponsor, had the lowest fees on major U.S.-focused sector ETFs.

For example, funds such as the Consumer Staples Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlp#NYSE">XLP</a>) and the Technology Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlk#NYSE">XLK</a>) feature expense ratios of 0.18%, which had made the select sector SPDRs ETFs cheaper than their Vanguard equivalents.

Vanguard, the third-largest U.S. ETF issuer, can now wear the crown as the major issuer with lowest-cost sector funds. 

The Vanguard Consumer Discretionary ETF (NYSE: <a class="ticker" href="/stock/vcr#NYSE">VCR</a>), the Vanguard Energy ETF (NYSE: <a class="ticker" href="/stock/vde#NYSE">VDE</a>), the Vanguard Consumer Staples ETF (NYSE: <a class="ticker" href="/stock/vdc#NYSE">VDC</a>), the Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>) and the Vanguard Utilities ETF (NYSE: <a class="ticker" href="/stock/vpu#NYSE">VPU</a>) have all seen annual expenses lowered to 0.14 percent from 0.19 percent.

The same fee reductions also apply to the Vanguard Health Care ETF (NYSE: <a class="ticker" href="/stock/vht#NYSE">VHT</a>), the Vanguard Industrials ETF (NYSE: <a class="ticker" href="/stock/vis#NYSE">VIS</a>), the Vanguard Information Technology ETF (NYSE: <a class="ticker" href="/stock/vgt#NYSE">VGT</a>) and the Vanguard Telecom Services ETF (NYSE: <a class="ticker" href="/stock/vox#NYSE">VOX</a>).

Pennsylvania-based Vanguard did lower the expense ratio on the Vanguard Financials ETF (NYSE: <a class="ticker" href="/stock/vfh#NYSE">VFH</a>) to 0.19 percent from 0.23 percent, but the Financial Services Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlf#NYSE">XLF</a>) is slightly cheaper at 0.18 percent per year. The firm also said it reduced the fees on the Vanguard Extended Duration Treasury Index ETF (NYSE: <a class="ticker" href="/stock/edv#NYSE">EDV</a>) to 0.12 percent from 0.13 percent. All of the changes take effect immediately.

Vanguard continued to emphasize that it is unique corporate structure allows to deliver cost-saving to investors.

"For Vanguard, our unique client-owned corporate structure is what drives the low costs of our funds.Since we area mutually owned firm, low costs are an outcome that is directly tied to how much it costs us to manage our funds. Economies of scale and a focus on keeping operating costs low have resulted in a long track record of Vanguard lowering costs across the board," <a href="https://advisors.vanguard.com/VGApp/iip/site/advisor/researchcommentary/article/IWE_NewsDec2012ExpenseRatio">the firm said in a statement</a>.

Last week, <a href="http://www.benzinga.com/markets/bonds/12/12/3198204/vanguard-fires-1-more-shot-in-2012-etf-fee-war">Vanguard announced fee cuts on 11 of its ETFs</a>, including the Vanguard Long-Term Government Bond ETF (NASDAQ: <a class="ticker" href="/stock/vglt#NASDAQ">VGLT</a>) and the Vanguard Russell 2000 Index ETF (NASDAQ: <a class="ticker" href="/stock/vtwo#NASDAQ">VTWO</a>).

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

Bonds

VGLT

VTWO

Vanguard Trims Fees on Sector ETFs

In the ETF game, size matters. As the exchange-traded products industry has evolved, professional and retail investors alike have become more obsessed with numbers. Underscoring the notion that a herd mentality still permeates financial markets, investors tend to find comfort in the largest, most heavily traded ETFs because those ETFs are big and heavily traded.

That is the case despite the fact that compelling evidence exists to suggest that <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/04/2518724/surprise-surprise-does-size-matter-with-etf-returns">bigger is rarely better when it comes to ETFs</a>. 

Perhaps what is most vexing is that this scenario is not confined to just one area of the ETF world. The conversation is not limited to a couple of China ETFs outperforming the iShares FTSE China 25 Index Fund (NYSE: <a class="ticker" href="/stock/fxi#NYSE">FXI</a>) or a fund or two being better alternatives than one of the sector SPDRs. The examples of <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/2955946/argument-for-low-volume-etfs-gains-steam">small ETFs turning in stellar performances</a> are too numerous to completely detail here.

There are some standouts worth examining, though. For example, the iShares Nasdaq Biotechnology Index Fund (NASDAQ: <a class="ticker" href="/stock/ibb#NASDAQ">IBB</a>) is, by most metrics, a fine ETF. Home to $2.5 billion in assets under management, the iShares Nasdaq Biotechnology Index Fund is the largest biotech ETF on the market. It has also performed quite well this year with a gain of 39.7 percent.

Chances are, few investors – professional or retail – would complain about making 40 percent in less than 10 months. On the other hand, those investors, particularly the retail crowd paying fees to advisors, probably would not be pleased to know that of the four major biotech ETFs, IBB is the worst performer on a year-to-date basis. 

The fund IBB is closest to in terms of performance, the SPDR S&amp;P Biotech ETF (NYSE: <a class="ticker" href="/stock/xbi#NYSE">XBI</a>), has outpaced IBB by over 300 basis points. The First Trust NYSE Arca Biotech Index Fund (NYSE: <a class="ticker" href="/stock/fbt#NYSE">FBT</a>) has topped IBB by 660 basis points. A biotech ETF that rarely <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/07/2713872/etfs-winners-that-could-keep-their-momentum-ephe-fbt-xhb">gets the credit it deserves</a>, the Market Vectors Biotech ETF (NYSE: <a class="ticker" href="/stock/bbh#NYSE">BBH</a>), has jumped almost 58 percent this year in near stealth fashion.

Proving that the bigger is not always better argument lingers across multiple sectors, there is the example of the First Trust Materials AlphaDEX Fund (NYSE: <a class="ticker" href="/stock/fxz#NYSE">FXZ</a>). At least this ETF <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/2971334/alphadex-etfs-do-things-differently-with-stellar-results">has drawn some praise</a> for trumping its rivals.

That is exactly what FXZ has done this year. In 2012, FXZ has topped the Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>) by 150 basis points and the Select Sector Materials SPDR (NYSE: <a class="ticker" href="/stock/xlb#NYSE">XLB</a>) by almost 480 basis points.

Moving on from sector funds, broad market ETFs focused on a particular cap spectrum also give investors bigger is not always better examples. Take the case of the Guggenheim Wilshire Micro-Cap ETF (NYSE: <a class="ticker" href="/stock/wmcr#NYSE">WMCR</a>). That ETF has just $13.4 million in assets under management compared to $478.6 million for the iShares Russell Microcap Index Fund (NYSE: <a class="ticker" href="/stock/iwc#NYSE">IWC</a>). 

Chances are if Joe Six Pack asked his financial advisor to put him into a micro-cap ETF, the advisor would choose IWC because its large by assets and has decent volume for these type of ETFs at almost 80,000 shares per day. Joe would have every right to be mad at his advisor because the choice means being cheated out of almost 700 basis points of alpha this year.

Arguably, three examples is enough to make investors wonder if all they are getting with large ETFs is a security blanket by way of size. In the process, their returns may be suffering.

For more on smaller ETFs that are outperforming, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/10/2971334/alphadex-etfs-do-things-differently-with-stellar-results">here</a>.

Emerging Market ETFs

Currency ETFs

First Trust NYSE Arca Biotechnology Index Fund

WMCR

Investors Cheating Themselves by Focusing on Largest ETFs

The materials sector accounts for just 3.5 percent of the S&amp;P 500's weight, making it the third-smallest sector in the broader market index ahead of only utilities and telecommunications. Even with that factoid, there are plenty of materials ETFs for investors to choose from. Including the inverse and leveraged products, there are nearly 60 <a href="http://etfdb.com/screener/">materials ETFs on the market today</a>.

No two materials ETFs are exactly the same, but the major funds tracking producers of basic materials such as DuPont (NYSE: <a class="ticker" href="/stock/dd#NYSE">DD</a>) and FreeportMcMoRan (NYSE: <a class="ticker" href="/stock/fcx#NYSE">FCX</a>) have a lot in common. The iShares Dow Jones U.S. Basic Materials Sector Index Fund (NYSE: <a class="ticker" href="/stock/iym#NYSE">IYM</a>), Materials Select Sectors SPDR (NYSE: <a class="ticker" href="/stock/xlb#NYSE">XLB</a>) and Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>) are not triplets, but one is not vastly different from the other. 

These are standard, passively managed cap-weighted funds. That approach has worked well at least in terms of attracting assets. In the case of XLB, the ETF has almost $2.5 billion in AUM. Impressive, but a smaller fund that does things a little bit differently is a worthy competitor to XLB and IYM and VAW for that matter.

Just look at how the First Trust Materials AlphaDEX Fund (NYSE: <a class="ticker" href="/stock/fxz#NYSE">FXZ</a>) stacks up against XLB. XLB uses the traditional cap-weighted methodology found in so many ETFs. There is nothing wrong with this approach as it keeps costs down, but it does mean a stock's size is often the most important criteria for inclusion in the ETF.

Regarding size, it is not surprising to see Monsanto and DuPont each accounting for 10.4 percent of XLB's weight. Freeport and Dow Chemical (NYSE: <a class="ticker" href="/stock/dow#NYSE">DOW</a>) combine for 16 percent of the fund's weight. That is four stocks representing a 37 percent of one ETF. 

The First Trust Materials AlphaDEX Fund, which is just over five-years-old compared to almost 14-years-old for XLB, does things differently. Home to 57 stocks, FXZ devotes no more than 3.2 percent of its weight to any single holding. FXZ has duplicate holdings with XLB such as DuPont, Dow and Freeport. However, the AlphaDEX selection methodology ensures FXZ is much different than XLB.

The AlphaDEX methodology is not active management per se, but it does employ quality screens on potential constituents for ETFs such as FXZ. FXZ tracks the NYSE Euronext constructs the StrataQuant Materials Index, which uses the AlphaDEX methodology. That ranks Russell 1000 members on metrics such as three, six and 12-month price appreciation, cash flow, book value, return on assets and others.

The stocks are scored and ranked with the bottom 25 percent being tossed aside and the "selected stocks are divided into quintiles based on their rankings and the top ranked quintiles receive a higher weight within the index," according to First Trust. 

That is how FXZ is put together. Not surprisingly, this way of constructing an ETF is pricy compared to the usual cap-weighted methodology. FXZ has annual fees of 0.7 percent compared to just 0.18 percent for XLB. FXZ is also slightly more volatile than XLB. 

This is a reward for the elevated volatility and higher fees: Over the past quarter, year and year-to-date FXZ has outperformed XLB by health margins, proving the AlphaDEX methodology is worth considering.

For more on materials ETFs, click <a href="http://www.benzinga.com/trading-ideas/long-ideas/12/09/2929002/hard-asset-boom-could-lift-these-etfs">here</a>.

ETF Showdown: Materials Melee 

Financial markets do enjoy news of quantitative easing. U.S. equities proved as much last Thursday when the Federal Reserve unveiled the latest version in what is now a trilogy of monetary stimulus. Part of the rub with QE in any form is that it is good for lifting near-term sentiment, but too much easing can have dour long-term consequences.

First and foremost is the potential for increased inflation. Inflation is not good because it diminishes the purchasing power of the dollar. That could mean a dollar will not buy the same amount of coffee, gold, oil, platinum, silver, etc. in five or ten years as it does today. 

It is an obvious trade. Hard assets rise in price, leading investors to covet the shares of quality hard asset producers. There is no dearth of materials ETFs on the market today with which to play this trend, but there are some not-so-obvious candidates that merit consideration.

FlexShares Morningstar Global Upstream Natural Resources Index ETF (NYSE: <a class="ticker" href="/stock/gunr#NYSE">GUNR</a>)

The FlexShares Morningstar Global Upstream Natural Resources Index ETF debuted a year ago and with almost $515 million in assets under management, it is fair to say this is one of the most successful ETFs that launched last year. Calling GUNR "obscure," is clearly inaccurate and unfair, but it is fair to say the fund does not receive the same notoriety as other materials-focused ETFs.

Popularity aside, GUNR merits consideration as an ETF that will benefit from rising hard asset prices. The ETF is a plethora of materials and natural resources equities. Agri-business and integrated oil names combine for half of the fund's weight, but the ETF also features a 16.7 weight to diversified mining firms and an 8.7 percent allocation to gold miners. 

Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>), the largest U.S. oil company, is GUNR's largest individual holding with a weight of almost 5.4 percent. GUNR is up 10.1 percent this year, easily outpacing the SPDR S&amp;P Metals &amp; Mining ETF (NYSE: <a class="ticker" href="/stock/xme#NYSE">XME</a>) in the process.

Market Vectors RVE Hard Assets Producers ETF (NYSE: <a class="ticker" href="/stock/hap#NYSE">HAP</a>)

As is the case with GUNR, the Market Vectors RVE Hard Assets Producers ETF is home to a robust AUM total ($146.2 million), but HAP is also an example of a hard assets fund that does not draw much acclaim. 

HAP and GUNR are similar in that both offer broad-based exposure to multiple materials and natural resources sub-sectors. For those investors that think the 120 stocks held by GUNR is not enough, HAP holds nearly triple that amount. However, HAP is not diverse as GUNR as the former allocates a combined 82 percent of its weight to energy and materials names. 

Top-10 holdings include Exxon, Monsanto (NYSE: <a class="ticker" href="/stock/mon#NYSE">MON</a>), Potash Corp. of Saskatchewan (NYSE: <a class="ticker" href="/stock/pot#NYSE">POT</a>) and BHP Billiton (NYSE: <a class="ticker" href="/stock/bhp#NYSE">BHP</a>), so there is some duplication with GUNR. HAP is also slightly more expensive with fees of 0.49 percent compared to 0.48 percent for GUNR. 

First Trust Materials AlphaDEX Fund (NYSE: <a class="ticker" href="/stock/fxz#NYSE">FXZ</a>)

The First Trust Materials AlphaDEX Fund is proof positive that index methodology can make a difference in an ETF's return. On the surface, FXZ would appear to be an also ran next to the Materials Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlb#NYSE">XLB</a>) and the Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>), just to name a pair. 

For starters, FXZ is not tiny with almost $176 million in assets under management. There are some <a href="http://www.ftportfolios.com/Retail/Etf/EtfSummary.aspx?Ticker=FXZ">moving parts to this ETF's index methodology</a>, but to describe it simple terms, the bottom 25 percent of the Russell 1000 Materials and Processing Index are eliminated. The "selected stocks are divided into quintiles based on their rankings and the top ranked quintiles receive a higher weight within the index. The stocks are equally-weighted within each quintile," according to First Trust. 

That means FXZ features some of the same constituents as XLB and VAW, but with vastly different weights. Asking why First Trust uses this is methodology is not important. Asking about the result is. Year-to-date, in the past year and over the past five years, XLB and VAW come nowhere FXZ in terms of generating alpha. 

For more on ETFs, click <a href="http://www.benzinga.com/etfs">here</a>.

GUNR

Market Vectors RVE Hard Assets Producers ETF

Hard Asset Boom Could Lift These ETFs

In what will go down as a tough year for the high beta trade, 2011 has been tough on scores of energy and materials ETFs regardless of how old or new those funds are. Europe's sovereign debt woes, slowing emerging markets growth and plenty of issues within the U.S. economy have chased investors out of volatile energy and materials ETFs into the waiting arms of staples and utilities ETFs.

Said differently, there have been betters to introduce materials ETFs, but give the FlexShares Morningstar Global Upstream Natural Resources Index ETF (NYSE: GUNR) for defying the odds. The 134-stock ETF has raked in almost $151 million in assets under management since its mid-September debut. Hey, that's better than some materials ETFs that have been on the market several years.

GUNR has an expense ratio of 0.48%, which puts its well above the dominant SPDR and Vanguard materials ETFs, but the new ETF does have a story to tell. Tracking the Morningstar Global Upstream Natural Resources Index, GUNR has gained over 6.2% in the past three months,

GUNR spreads out its allocations well as no stock gets a weight of more than 5.34%. Honors for the ETF's largest holding go to Exxon Mobil (NYSE: <a class="ticker" href="/stock/xom#NYSE">XOM</a>) and other top-10 holdings read like a who's who of the energy and mining sectors. BHP Billiton (NYSE: <a class="ticker" href="/stock/bhp#NYSE">BHP</a>), Potash (NYSE: <a class="ticker" href="/stock/pot#NYSE">POT</a>), Monasnto (NYSE: <a class="ticker" href="/stock/mon#NYSE">MON</a>), Chevron (NYSE: <a class="ticker" href="/stock/cvx#NYSE">CVX</a>), Rio Tinto (NYSE: <a class="ticker" href="/stock/rio#NYSE">RIO</a>), BP (NYSE: <a class="ticker" href="/stock/bp#NYSE">BP</a>) and Royal Dutch Shell (NYSE: GUNR) are also among the names in GUNR's top-10 fray.

Something else to consider is GUNR's sector breakdown: 57% materials, 30% energy and, we kid you not, 7% to consumer staples and 4% to utilities. Go figure, but maybe that 11% makes GUNR a little more palatable for risk-averse investors.

Ten countries get allocations worth mentioning in GUNR, but three – the U.S., Canada and the U.K. – account for about 70% of the ETF's weight.

So overall, the FlexShares Morningstar Global Upstream Natural Resources ETF is off to a stellar start, especially when considering the environment, and that AUM total is impressive under any circumstances. And if 2012 delivers the rebirth of the "risk on" trade, then GUNR will be an excellent performer. That much is clear.

However, we leave with a truth that must be acknowledged: In the past three months, GUNR has been sharply outperformed by the Materials Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlb#NYSE">XLB</a>) and the Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>). As in XLB and VAW have doubled in GUNR's returns in the past 90 days and they've done that with expense ratios of 0.2% and soon to be 0.19% in the case of VAW, respectively.

Checking In: Another Under The Radar Resources ETF

Vanguard, the third-largest U.S. ETF issuer, is taking the ax to expense ratios on ten of its popular sector ETFs, a move that will intensify the firn's rivalry with the SPDRs family of sector funds.

The 10 Vanguard ETFs will mostly see their expense ratios pared to 0.19% from 0.24%. That undercuts the comparable by SPDR ETFs by one basis point. Most of the SPDRs sector ETFs currently have expense ratios of 0.2%.

Vanguard announced the changes in a filing with the Securities and Exchange Commission last week, but the funds still show expense ratios of 0.24% on Vanguard's Web site.

The ETFs undergoing the changes are the Vanguard Consumer Discretionary ETF (NYSE: <a class="ticker" href="/stock/vcr#NYSE">VCR</a>), Vanguard Consumer Staples ETF (NYSE: <a class="ticker" href="/stock/vdc#NYSE">VDC</a>), Vanguard Energy ETF (NYSE: <a class="ticker" href="/stock/vde#NYSE">VDE</a>), Vanguard Health Care ETF (NYSE: <a class="ticker" href="/stock/vht#NYSE">VHT</a>), Vanguard Industrials ETF (NYSE: <a class="ticker" href="/stock/vis#NYSE">VIS</a>), Vanguard Information Technology ETF (NYSE: <a class="ticker" href="/stock/vgt#NYSE">VGT</a>), Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>), Vanguard Telecommunication Services ETF (NYSE: <a class="ticker" href="/stock/vox#NYSE">VOX</a>) and the Vanguard Utilities ETF (NYSE: <a class="ticker" href="/stock/vpu#NYSE">VPU</a>).

The Vanguard Financials ETF (NYSE: <a class="ticker" href="/stock/vfh#NYSE">VFH</a>) will see its fees cut to 0.23% from 0.27%, but the new expense ratio is still above the 0.2% offered by the Financial Select Sector SPDR (NYSE: <a class="ticker" href="/stock/xlf#NYSE">XLF</a>).

Vanguard had 64 ETFs with $173.3 billion in assets under management at the end of November, according to data from the National Stock Exchange.

Vanguard Taking The Ax to Fees On 10 Sector ETFs

Here is the ETF Professor's ETF Watch List for Thursday December 22, 2011.

The Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>) was down almost 2% on Wednesday.

The Direxion Daily Energy Bull 3X Shares (NYSE: <a class="ticker" href="/stock/erx#NYSE">ERX</a>) was a top performer among leveraged funds.

Keep an eye on the iShares Dow Jones Transportation ETF (NYSE: <a class="ticker" href="/stock/iyt#NYSE">IYT</a>).

Emerging markets plays of the day: iShares MSCI Taiwan Index Fund (NYSE: <a class="ticker" href="/stock/ewt#NYSE">EWT</a>), Market Vectors Russia ETF (NYSE: <a class="ticker" href="/stock/rsx#NYSE">RSX</a>) and the Vanguard MSCI Emerging Markets ETF (NYSE: <a class="ticker" href="/stock/vwo#NYSE">VWO</a>).

Forex play of the day: WisdomTree Dreyfus Chinese Yuan (NYSE: <a class="ticker" href="/stock/cyb#NYSE">CYB</a>).

Bond play of the day: ProShares UltraShort 20+ Year Treasury (NYSE: <a class="ticker" href="/stock/tbt#NYSE">TBT</a>).

After-Hours Center

iShares Dow Jones Transportation Average Index Fund

Market Vectors Russia ETF Trust Shares of Beneficial Interest

ProShares UltraShort Lehman 20+ Year Treasury

ETFs to Watch December 22, 2011

Investors will have a slew of economic data to mull over this morning. The jobs report, which will be released at 8:30 a.m., will be at the forefront of the action. The data is sure to move the market which has been indecisive in this week's trade. 

Included in the jobs report will be Nonfarm Payrolls which increased by 192,000 in February. The consensus number this morning is an expected addition of 190,000 jobs.

Manufacturing Payrolls are expecting to show a gain of 30,000 jobs. Last month saw a jump of 33,000.

Nonfarm Private Payrolls will be reported as well. The private sector, which beat expectations last month by 24,000 jobs, is expected to have grown by a consensus figure of 200,000.

After posting no gain in last month's report, Hourly Earnings are foreseen to have risen by a consensus of 0.2%.

The Street is forecasting a slight rise in the Average Workweek from 34.2 to 34.3 hours worked.

The all-important unemployment rate will finish out the jobs report figures. Consensus estimates expect the overall number to mirror last month's report and remain at 8.9%. The unemployment rate fell below 9% for the first time since early 2009 last month. A number back above 9% could prove worrisome for traders and money managers.

If numbers turn out to be positive, look for the retail sector to put in nice gains. Optimism regarding the jobs market is sure to lead to a boost in consumer spending and should bode well for the SPDR S&amp;P Retail ETF (NYSE: <a class="ticker" href="/stock/xrt#NYSE">XRT</a>). If you are yearning for something a bit more adventurous, watch shares of Best Buy (NYSE: <a class="ticker" href="/stock/bby#NYSE">BBY</a>) which have been beaten down since disappointing earnings last Thursday. Best Buy could benefit from an optimistic employment forecast as discretionary spending would be expected to rise.

Not to be overlooked, ISM Index numbers are to be reported at 10a.m. Last month's report saw solid growth in the manufacturing sector as the ISM Manufacturing Index rose from 60.8 to 61.4. Consensus estimates are for the number to be 61.0 for March.

ISM Prices Paid looks to come in at 83.0. Last month's was slightly lower at 82.0.
Whichever way you think the numbers will play out, a straightforward way to trade the manufacturing reports are with broad based industrial and materials ETFs such as SPDR Dow Jones Industrial Average (NYSE: <a class="ticker" href="/stock/dia#NYSE">DIA</a>), iShares Dow Jones US Industrials (NYSE: <a class="ticker" href="/stock/iyj#NYSE">IYJ</a>), or Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>).
Construction Spending will also be released at 10a.m and The Street is expecting the number to be -0.1%. The prior number came in at -0.7%.

Economics

SPDR Dow Jones Industrial Average ETF Trust

iShares Trust Dow Jones US Industrial Sector Index Fund

Preview: Friday Morning's Economic Data (XRT, BBY, DIA, IYJ, VAW)

Here is the ETF Professor's ETF Watch List for Wednesday October 6, 2010. 
The market was so strong on Tuesday that even the iShares MSCI Japan Index Fund (NYSE: <a class="ticker" href="/stock/ewj#NYSE">EWJ</a>) jumped more than 3%.
With the Dow looking strong, try the ProShares Ultra Industrials (NYSE: <a class="ticker" href="/stock/uxi#NYSE">UXI</a>).
With materials names looking strong, trade the Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>).
Emerging markets plays for the day: iShares MSCI Brazil Index Fund (NYSE: <a class="ticker" href="/stock/ewz#NYSE">EWZ</a>), SPDR S&amp;P Emerging Europe ETF (NYSE: <a class="ticker" href="/stock/gur#NYSE">GUR</a>) and the Market Vectors Russia ETF (NYSE: <a class="ticker" href="/stock/rsx#NYSE">RSX</a>).
Can financials keep it going? Let's see with the Direxion Daily Financial Bull 3X Shares (NYSE: <a class="ticker" href="/stock/fas#NYSE">FAS</a>).
Forex play of the day: CurrencyShares Euro Trust (NYSE: <a class="ticker" href="/stock/fxe#NYSE">FXE</a>).
Bond play of the day: SPDR Barclays Capital International Treasury Bond ETF (NYSE: <a class="ticker" href="/stock/bwx#NYSE">BWX</a>).

ETFs To Watch October 6, 2010 (UXI, FXE, RSX, EWZ)

Here's what Benzinga's reading around the web today.
The Benzinga Daily Reading List 
 
<a href="http://www.bespokeinvest.com/thinkbig/2010/6/30/sector-performance-at-the-halfway-point.html">Bespoke's graph</a> suggests that the last two quarters haven't been a good time to be in the Vanguard Materials ETF (NYSE: <a class="ticker" href="/stock/vaw#NYSE">VAW</a>). (Bespoke Investment Group) 
 
There's been so much chaos in the markets that <a href="http://vixandmore.blogspot.com/2010/06/vix-showing-signs-of-progressive.html">the VIX is becoming desensitized</a>. (VIX and More) 
 
<a href="http://www.thestreet.com/story/10797206/1/is-fiscal-austerity-being-rewarded.html">The fiscal austerity bandwagon</a> might be losing steam among investors. (TheStreet) 
 
Killers, drunk walking and economics -- see how they're related with <a href="http://freakonomics.blogs.nytimes.com/2010/07/01/you-should-walk-home/">Freakonomics</a>. (Freakonomics) 
 
A look at <a href="http://pragcap.com/jeff-gundlach-says-the-usa-will-default?utm_source=twitterfeed&amp;utm_medium=twitter>"debt, deficits and reality<a>. (Pragmatic Capitalism)</a></a>

The Benzinga Daily Reading List (VAW)

Materials Sector Weekly Round-up: WD-40 tops list; Sigma Lithium at bottom

Seeking Alpha Readers Predict Tech, Health Care Will Have Best Returns For 2024: Are They Right?

VAW: Materials Dashboard For January

Resource Sector Considerations For 2024

Commodity prices face downward pressure as China's economic woes continue – CME Group

BofA clients injected $900M into U.S. equities last week

FMAT: Materials Sector Dashboard For March

What Are Markets Pricing In?

Vanguard Materials ETF declares quarterly distribution of $0.6817

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Vanguard Materials ETF (ARCA:VAW), Trade Ideas