“Parts of me are excellent,” is my elderly friend’s reply to inquiries about her health. The same could be said of mature markets. Parts of them work better than others.

According to Morgan Stanley research published in early October, utilities and consumer staples looked like the most promising sectors in the U.S. economy while information technology and energy were the least attractive. Training your attention to sectors you believe will prosper could give your clients the lift they’ve been looking for, and exchange traded funds can deliver sectors with ease and specificity.

ETFs exist for every U.S. market sector and for five Canadian sectors, energy, information technology, gold, financials and real estate investment trusts. Some ETFs slice and splice sectors further. For example, within the technology sector you can get an ETF specific to software, semi-conductors, internet and even networking.

But don’t restrict yourself to North American sectors. Global sectors may show even more promise. Globalization, it seems, has caused developed foreign economies to walk in closer step with North America. This tendency diminishes the advantage of taking a country approach to diversification, at least when those countries are members of the European Monetary Union. Riding the crest of a vibrant sector across the globe is the latest version of international funds and ETFS have made this possible.

Global ETFs currently exist on the energy, financial, healthcare, telecommunications and technology sectors and many more of these global sector ETFs are expected. This trend is worth paying attention to. Europeans have already caught on: the number of sector ETFs listed in Europe has grown dramatically.

Sponsored by Barclays Global Investors Canada Limited
Contact Howard Atkinson at howard.atkinson@barclaysglobal.com

Commissions, management fees and expenses all may be associated with Exchange Traded Funds. Please read the relevant prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated. BGI’s ETFs, other than iUnits, are not qualified for distribution to the public in Canada as no prospectus has been filed for such funds with Canadian securities regulators.