Market Overview

Grandpa's 2012 ETF Portfolio


Nearly a year ago to the day we highlighted some ETFs even the most conservative investors could embrace. That version of Grandpa's ETF Portfolio probably didn't catch anyone by surprise.

After all, it featured a mix of income plays, one of the biggest ETFs on the market tracking value stocks and the Utilities Select Sector SPDR (NYSE: XLU) and the Market Vectors Pharmaceuticals ETF (NYSE: PPH), which back then was the Pharmaceuticals HOLDRs.

XLU and PPH were two of the better sector ETFs in 2011 and the other grandad plays held up pretty well considering the topsy-turvy market environment investors had to contend with. Well, it's a new year so it's time to consider new ETF plays that grandad would love.

Health Care Select Sector SPDR (NYSE: XLV) We're replacing PPH with the Health Care Select Sector SPDR because XLV has slightly outperformed PPH year-to-date and with an expense ratio of just 0.18%, XLV is now the cheapest of all health care-related ETFs. Dow components Johnson & Johnson (NYSE: JNJ), Pfizer (NYSE: PFE) and Merck (NYSE: MRK) account for nearly a third of XLV's holdings and if size matters, then it should be noted that XLV is the second-largest of any health care fund, mutual funds included.

Global X Permanent ETF (NYSE: PERM) The Global X Permanent ETF isn't even a week old, but the ETF's composition gives it an all-weather feel. Roughly half of PERM's weight is allocated to long-term and short-term Treasuries and another 20% is devoted to a gold ETF, so even this is a new ETF, it warrants consideration by the risk-averse among us.

PowerShares S&P 500 Low Volatility ETF (NYSE: SPLV) One of the best ETFs to debut in 2011 at least in terms of garnering assets, SPLV could be a fine idea in the event of an extended pullback. Remember what we previously said about this ETF: "SPLV could be your grandfather's favorite ETF. A low expense ratio at 0.25% and utilities and staples combining for 62% of the ETF's weight make it a conservative investor's dream."

Russell 1000 Low Volatility ETF (NYSE: LVOL) Another "low vol" play that rolled out last year, LVOL is cheap with an expense ratio of 0.2%. That's one plus. The other is that staples and utilities represent 43% of the ETF's weight.

iShares High Dividend Equity Fund (NYSE: HDV) If you want health care exposure, but don't want a pure play ETF like XLV, then try the iShares High Dividend Equity Fund. Health care accounts for about 28% of HDV's weight and the Dow pharma trio of Pfizer, Johnson & Johnson and Merck combine for 20% of the ETF's total allocation. Other top-10 holdings include AT&T (NYSE: T), Procter & Gamble (NYSE: PG) and Intel (Nasdaq: INTC).

Russell 2000 Low Beta ETF (NYSE: SLBT) Another new volatility play from Russell Investments, SLBT holds over 370 stocks and is designed to give investors exposure to the lowest beta members of the Russell 2000 Index. As such, SLBT's beta against the Russell 3000 is quite favorable.

Posted-In: Long Ideas News Sector ETFs Broad U.S. Equity ETFs Short Ideas Dividends Dividends Specialty ETFs Best of Benzinga


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