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Articles on XLY

  • Dividend Payout Reflects the New Reality

    08/02/2011

    With many energy and high tech stocks paying more and more dividends, the landscape of dividend payout percentages in S&P 500 has changed. In a recent article titled as Burned Before, Dividend Funds Diversify Beyond Same Old Sectors, author Sarah Morgan reported that many dividend stock funds have diversified their investment beyond financial sector concentration to other new sectors.

    The following chart from the article shows the change:

    It is interesting to see that now, consumer staple stocks (XLP) is the largest sector for dividend payout. With Energy (XLE) and technology (XLK) being very close to the second largest financial sector (XLY), investors are now more in favor of these two sectors.

    This change bodes well to our long standing argument that

    • technology companies, being one of the main beneficiaries of globalization, have better balance sheets and are now more shareholder friendly.
    • resource (energy) companies will do well in the era of depleted natural and energy resources.

    Dividend investors should also focus on dividend appreciation (rising dividend) instead of merely current dividend amounts (dividend hogs). The rising dividend approach will allow you to find more energy and technology companies. In fact, it will allow you to even consider those gold mining stocks (such as Newmont (NEM)) that have increased their dividends steadily recently. As gold price continues to rise, these stocks or ETFs (such as market vector gold mining stock GDX) might be worth a look.

    See Retirement Income ETFs plan for portfolios using dividend and interest paying ETFs such as DVY, VIG, VYM.

    Symbols: XLK, XLE, XLY, GDX, SPX, COMP, VIG, DVY, Dividend Investing, Retirement Investing

     

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  • XLE The Clear Sector Leader

    05/03/2011

     

    In a retirement account, Sector investing can be very worthwhile. It can lead to portfolio returns that “beat the market”. Sectors offer a way of focusing, in a disciplined fashion, similar to looking at Countries, or broad markets. At any given point in time, one or more sectors may be out performing other sectors, and the broad stock market. Portfolios that include Sector allocation can capture this performance.

     

    A great way to get sector exposure is through exchange traded funds. Today, there are numerous 'sector' type exchange traded funds that you can invest in. The iShares and the SPDR lineups are probably the two most popular. However there are several other providers that offer unique and interesting sector and industry ETFs.

     

    Below is the Sector performance table, sorted by “Trend Score”, which is also posted at MyPlanIQ - Global Trends .

    US Sectors TrendPerformance data are based on closing prices on April 29th 2011

    Description

    Symbol

    1 Week

    4 Weeks

    13 Weeks

    26 Weeks

    52 Weeks

    Trend Score

    Energy

    XLE

    1.9%

    0.61%

    13.56%

    36.92%

    36.63%

    17.92%

    Industries

    XLI

    2.84%

    1.9%

    8.48%

    21.41%

    22.37%

    11.4%

    Materials

    XLB

    1.04%

    1.74%

    8.45%

    18.79%

    24.64%

    10.93%

    Healthcare

    XLV

    2.89%

    5.89%

    11.99%

    14.16%

    17.58%

    10.5%

    Telecom

    IYZ

    1.95%

    2.63%

    7.69%

    14.23%

    25.69%

    10.44%

    Consumer Discretionary

    XLY

    1.6%

    3.18%

    9.67%

    16.07%

    18.29%

    9.76%

    Consumer Staples

    XLP

    2.01%

    4.82%

    9.38%

    11.14%

    17.39%

    8.95%

    Technology

    XLK

    1.48%

    2.81%

    3.87%

    10.58%

    15.95%

    6.94%

    Utilities

    XLU

    2.85%

    3.24%

    5.8%

    6.83%

    13.65%

    6.48%

    Financial

    XLF

    1.74%

    -0.91%

    1.06%

    13.2%

    2.44%

    3.51%

    The trend score is defined as the average of 1,4,13,26 and 52 week total returns (including dividend reinvested).

     

    With all of the headline news lately, it is no surprise that the Energy Sector ETFs are the strongest. The holdings inside the ETFs usually include the large cap oil companies such as Exxon and Chevron, and, some of the smaller cap companies. When crude oil, and petroleum product prices rise, usually the margins of the oil companies expand. An example could be the cost of production of a barrel of crude stays relatively fixed, as the selling price of the barrel of crude goes higher. Similarly, some of the costs of refining a gallon of gasoline stay relatively fixed, as the selling price of that gallon goes higher.

     

    These energy sector ETFs are definitely on my retirement portfolio watch list this year.

     

    Disclosure: MyPlanIQ does not have any business relationship with the company or companies mentioned in this article. It does not set up their retirement plans. The performance data of portfolios mentioned above are obtained through historical simulation and are hypothetical.

     

    Exchange Tickers: (NYSE:XLE), (NYSE:XLI), (NYSE:XLB), (NYSE:XLV), (NYSE:IYZ), (NYSE:XLY), (NYSE:XLP), (NYSE:XLK), (NYSE:XLU), (NYSE:XLF)

     

    Symbols: XLE, XLI, XLB, XLV, IYZ, XLY, XLP, XLK, XLU, XLF

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  • Schwab ETF Select List Plan Offers Diversification and High Quality Fund Selection

    03/16/2011

    by Kevin Carr, A MyPlanIQ Expert User

    On March 9, 2011, Charles Schwab announced the release of the ETF Select List.  The quarterly Schwab ETF Select List was created by Charles Schwab Investment Advisory, Inc. and is a filtered list of all of the ETFs in the marketplace, highlighting pre-screened, low-cost ETFs.  Schwab used quantitative and qualitative screens to filter each ETF and build the list, covering 6 major asset categories and 45 minor asset categories. All ETFs, including Schwab ETFs, are evaluated using the same criteria and broken into sectors for US Equity, Foreign Equity, Emerging Market Equity, Fixed Income, Commodity and REITs.

    The ETF Select List gives investors a choice of low-cost, pre-screened ETFs.  Schwab highlights just one ETF in each category, chosen based on specific criteria including expense ratio, risk, structure and how well it fits into its category. To make the list, an ETF has to meet minimum criteria that include assets under management, including narrowness of index, trading volume, bid/ask volatility, risk, annualized cost of ownership, fund structure and fit within a given category.  The list excludes exchange-traded notes (ETNs), inverse or leveraged ETFs, actively managed ETFs, and unmanaged baskets of securities.

    While the ETF Select List has only been out a few days, I constructed a plan on MyPlanIQ platform.  The Schwab ETF Select List  has no redemption periods, is commission efficient and offers low expenses. 

    As of March 13, the Schwab ETF Select List Plan has a four star investment menu rating with a 99% diversification score and an overall above average investment choice based on MyPlanIQ Plan Rating methodology .  The Plan Rating methodology is designed to measure how effective a plan’s available funds are using key factors such as diversification, fund quality and portfolio building.

    Attribute   Schwab ETF Select List   Six Core Asset ETF Benchmark
    Diversification   great (99%)   average (63%)
    Fund Quality   above average (70%)   below average (23%)
    Portfolio Building   average (53%)   above average (70%)
    Overall Rating   above average (72%)   average (54%)


    The chart and table below show the historical performance of moderate model portfolios employing strategic and tactical asset allocation strategies (SAA and TAA , both provided by MyPlanIQ). For comparison purpose, we also include the moderate model portfolios of a typical 6 asset SIB (Simpler Is Better) plan . This SIB plan has the following candidate index funds and their ETFs equivalent:

    US Equity: SPY or VTI
    Commodity: DBC
    Foreign Equity: EFA or VEU
    REITs: IYR or VNQ or ICF
    Emerging Market Equity: EEM or VWO
    Fixed Income: AGG or BND

    Performance chart (as of Mar 15, 2011)



    Performance table (as of Mar 15, 2011)

    Currently Commodities, Real Estate and US Equity are doing well. These asset classes are available to Schwab ETF Select List participants.

    To Summarize, Schwab ETF Select List Plan offers wide diversification, high quality funds with low expenses. compared with other brokerage supported ETF plans, it is very favorable. From time to time, we will review the plan.

    Symbols:DBC,DBA,IAU,DBB,USL,PFF,VNQ,XLY,XLP,XLE,XLF,XLV,XLI,XLB,XLK,IYZ,XLU,BND,SCHO,SCHR,TLH,SCHP,CIU,JNK,BWX,MUB,SCHF,EFG,EFV,SCHC,SCHE,VEU,VT,VGK,VPL,EWJ,GXC,SCHX,SCHG,SCHV,VO,VOT,VOE,SCHA,VBK,VBR,SCHB,VYM,

    Symbols (exchange): (DBC),(DBA),(IAU),(DBB),(USL),(PFF),(VNQ),(XLY),(XLP),(XLE),(XLF),(XLV),(XLI),(XLB),(XLK),(IYZ),(XLU),(BND),(SCHO),(SCHR),(TLH),(SCHP),(CIU),(JNK),(BWX),(MUB),(SCHF),(EFG),(EFV),(SCHC),(
    SCHE),(VEU),(VT),(VGK),(VPL),(EWJ),(GXC),(SCHX),(SCHG),(SCHV),(VO),(VOT),(VOE),(SCHA),(VBK),(VBR),(SCHB),(VYM)

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  • Rising Energy Costs: Casting a Cloud over Energy-Dependent Sector ETFs

    01/15/2011

    The relative performance among sector ETFs remained largely unchanged last week, with energy (XLE) retaining its top spot. However, we saw a broad-based drop in trend scores across sectors. Marking a shift in sentiment, consumer discretionary (XLY) dropped to the fourth spot from being second a week ago. By examining the following table, one can gain critical insights into how to build portfolios at the sector level:

    Assets Class

    Symbols

    01/12
    Trend
    Score

    01/05
    Trend
    Score

    Direction

    Energy

    XLE

    16.21%

    14.72%

    ^

    Materials

    XLB

    13.6%

    14.24%

    v

    Industrials

    XLI

    12.87%

    14.01%

    v

    Consumer Discretionary

    XLY

    12.11%

    14.32%

    v

    Technology

    XLK

    9.71%

    10.35%

    v

    Telecom

    IYZ

    8.74%

    13.08%

    v

    Financial

    XLF

    8.08%

    9.88%

    v

    Consumer Staples

    XLP

    5.21%

    6.52%

    v

    Healthcare

    XLV

    4.68%

    5.18%

    v

    Utilities

    XLU

    3.25%

    3.65%

    v

    Fundamentals are improving the in the financial sector (XLF), with industry bellwether J.P. Morgan Chase reporting record-breaking profits on Friday. As credit condition has improved, delinquencies have dropped and lending activities are picking up. The industry is still facing headwinds. Litigations centered on mortgage buyback and still weak housing markets will post pressure on the margins.

    Energy (XLE) was lifted by rising oil prices. Along with the sharp rise in demand for heating oil and naturals gas driven by the severe winter conditions in the Northeast, the closure of the Trans-Alaska pipeline has helped push oil past $91. One may ask the question of whether rising energy costs would post a thread to the economic recovery and how this would affect the dynamics in sectors (e.g. industrials (XLI), consumer (XLY)) that are exposed to the volatile oil market and that require large energy input.

    Some economists have suggested as the U.S. economy becomes more service oriented, with energy costs accounting for less in the overall cost structure of the economy, rising oil prices would have little effect on the overall economy. That said, it’s crucial to recognize that rising energy costs would certainly affect consumer behavior and business spending at least in the short run. Therefore, identifying sectors that would be negatively affected in an event of oil shock is critically important when building a portfolio at the sector level.

    For more detailed total return performance, please see here.


     

     

    labels:investment,

    Symbols:XLY,IYZ,XLI,XLB,XLK,XLE,XLF,XLP,XLU,XLV,SPY,QQQQ,IWM,MDY,EFA,VEU,EEM,VWO,IYR,ICF,VNQ,GSG,DBC,DBA,USO,LQD,CSJ,CIU,HYG,JNK,PHB,TLT,IEF,SHY,SHV,BND,AGG,MUB,MBB,

     

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  • Most U.S. Sector End Sharply Higher For The Year

    01/01/2011

    MyPlanIQ tracks detailed weekly U.S. sectors trend movements. We use ETFs that represent each sector and present the results here. More details can be found in MyPlanIQ 360 Degree Market View.

    Energy (XLE), Materials (XLB), and Industrials (XLI) remain as the top three sectors this week.

    Rising oil prices have helped propel the energy sector (XLE) higher, outperforming the broader market in the fourth quarter. As economic activity picks up with reports on dwindling U.S. crude oil inventories, optimism may drive oil prices past the $100 a barrel mark in the near term.

    Following its recent up trend, materials (XLB) goes another notch higher and gained 1.25% this week. Recording-setting commodity prices in 2010 were primary driven by adverse weather and robust demand from China. The materials sector is expected to continue to do well in 2011 as commodity-hungry economies such as China and India are leading demand for industrial and construction materials.

    The industrials sector (XLI) had a stellar year, handing investors a 26% return in 2010. Many analysts have recently revised upward their estimates for the 12-month forward earnings by the industrials sector. We expect the positive momentum will carry through the first half of 2011. Against this favorable backdrop, (XLY) makes an attractive momentum play in the medium term.

    The healthcare sector (XLV) underperformed the broader market with an annual gain of 2.46%. High unemployment rate and the revamped healthcare law have put pressure on margins and earnings throughout the healthcare supply chain.

    Defensive stalwart the utilities sector (XLU) lagged with annual gains of 3%.

    Assets Class

    Symbols

    29-Dec

    22-Dec

    Annual

    Direction

    Trend

    Trend

    Return

    Score

    Score

     

    Energy

    XLE

    17.53%

    15.73%

    12.35%

    ^

    Materials

    XLB

    16.82%

    14.99%

    26.54%

    ^

    Industrials

    XLI

    14.43%

    13.77%

    2.46%

    ^

    Consumer Discretionary

    XLY

    14.23%

    13.81%

    3.01%

    ^

    Telecom

    IYZ

    11.69%

    10.34%

    11.38%

    ^

    Technology

    XLK

    9.81%

    8.66%

    10.47%

    ^

    Financials

    XLF

    9.56%

    9.25%

    26.49%

    ^

    Consumer Staples

    XLP

    7.57%

    7.37%

    20.10%

    ^

    Healthcare

    XLV

    4.63%

    4.40%

    18.73%

    ^

    Utilities

    XLU

    3.91%

    3.99%

    17.50%

    v


     

    labels:investment,

    Symbols:XLY,IYZ,XLI,XLB,XLK,XLE,XLF,XLP,XLU,XLV,SPY,QQQQ,IWM,MDY,EFA,VEU,EEM,VWO,IYR,ICF,VNQ,GSG,DBC,DBA,USO,LQD,CSJ,CIU,HYG,JNK,PHB,TLT,IEF,SHY,SHV,BND,AGG,MUB,MBB,


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  • U.S. Sectors Trend: Cautious Gains Amid Mixed Catalyst

    12/19/2010

  • U.S. Sectors Up on Economic Hopes

    12/11/2010

  • US Sectors Nov 29

    11/30/2010

  • US Sectors Up Across the Board

    11/23/2010

  • Top US Sectors Weather the week well -- bottom half feels the pain

    11/19/2010

  • ETFs Provide Insight Into U.S. Sectors' Performance

    11/12/2010

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