With major U.S. equity indexes continuing to push into uncharted territory, 2013 has undoubtedly brought back bullish momentum in full force. As investors pile back into equities, certain corners of the market that were once hammered by the 2008 financial crisis are now finally showing signs of life. Cyclical industries in particular have benefited significantly from this year’s bull market, as investors shift their focus to riskier and more promising sectors of the market [see The Cheapest ETF for Every Investment Objective].
For those looking for ways to play this trend, we highlight seven of the most popular cyclical industry ETFs that may stand to benefit in this bull market:
NASDAQ Global Auto Index Fund (CARZ, C+)
This ETF is currently the only fund that offers targeted exposure to the global automobile industry. The fund’s top holdings include Ford (F), Honda Motor Co, Hyundai Motor Co and Toyota Motor Corp, which together account for over one-third of the fund’s total assets. With regards to geographic diversification, CARZ offers exposure to Japan, U.S., Germany, South Korea and China.
Market Vectors Gaming ETF (BJK, B-)
This Van Eck offering is designed to invest in publicly traded companies worldwide that derive more than half of revenues from the global gaming industry. BJK’s portfolio consists of roughly 47 individual holdings, featuring exposure to some of the top names in the industry, such as Las Vegas Sands Corp (LVS) and Wynn Resorts (WYNN). The fund also features a well balanced mix of giant-, large- and mid-cap stocks, as well as some exposure to smaller capitalization companies [see How To Take Advantage Of The Great (Sector) Rotation].
Dynamic Leisure & Entertainment Portfolio (PEJ, B-)
Debuting in 2005, PowerShares’ PEJ is still the only fund available on the market that exclusively focuses on the leisure and entertainment industry. About one-third of the fund’s portfolio is made up of publicly traded restaurants, featuring popular names like Starbucks (SBUX) and Fiesta Restaurant Group Inc (FRGI). PEJ also features allocations to several other sub-industries, including movies and entertainment, hotels, cruise lines, broadcasting, and casinos.
Market Vectors Steel Index ETF (SLX, B+)
This ETF allows investors to gain exposure to companies involved in a variety of activities related to steel production, including the operation of manufacturing mills, fabrication of steel products, and iron ore extraction and reduction. Though SLX’s portfolio is relatively shallow with its 26 holdings, it does offer meaningful exposure to steel equities from around the globe, featuring allocations to the U.S., Brazil, the U.K. and South Korea.
MSCI Europe Financials Sector Index Fund (EUFN, B)
This iShares’ fund offers exposure to the financials sector of developed market countries in Europe. Just over half of EUFN’s total assets are allocated to banks, while insurance, diversified financials and real estate equities account for the remainder of the portfolio. Top country allocations include the U.K., Switzerland, France and Germany.
SPDR DJ Wilshire International Real Estate Fund (RWX, A-)
With over $4.2 billion in assets under management, RWX is by far the most popular optios for investors looking to add global real estate exposure to their portfolios. The fund holds roughly 130 individual securities, the majority of which are large- and mid-cap companies. Exposure is nicely spread out across various countries, including Japan, Australia, Hong Kong and the U.K. [see Global Titans ETFdb Portfolio].
Fertilizers/Potash ETF (SOIL, B-)
This ETF is designed to track the performance of the largest and most liquid companies from around the globe that are active in some aspect of the fertilizer industry. Though SOIL’s portfolio is rather shallow with its 25 holdings, the fund does offer broad geographic diversification as well as well-balanced exposure to small-, mid- and large-cap equities.
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Disclosure: No positions at time of writing.
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