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Three ETFs to Watch in the Second Quarter

This post is part of a regular series written by ETF Trends editor Tom Lydon, special for CNBC.com.

The first quarter got the year off to a good start. Corporate earnings improved, the mood of consumers is up and we’re even beginning to see some signs of progress in one of the most pressing problems, the U.S. job market. If you've found that you've been defensive lately and looking to stick your toe back in the water, here are three exchange-traded funds (ETFs) to watch in the second quarter:

PowerShares Dynamic Leisure and Entertainment

- The economy has improved enough that Americans are once again venturing out to spend money on fun things such as movies, dinners out and morning lattes.

- American consumers showed restraint during the crisis, but they’re ready to spend on things like trips to Vegas and fast food — if they find a great deal.

- Media ad spending is once again on the rise; internet ad spending is forecast to overtake all other forms by 2011.

S&P Metals and Mining

- With precious and base metal prices at lofty levels, miners are enjoying huge profit margins right now. Case in point: it takes about $275 to extract an ounce of gold from the ground, and that same ounce is selling in the neighborhood of $1,100 an ounce.

- Emerging market residents are becoming more middle class, increasing demand for base and precious metals alike. Not only is more building taking place to accommodate this growth, but spending on jewelry is also on the rise.

- Factories are powering up again, skyscrapers are being built and auto demand is increasing. All this activity is increasing the demand for industrial metals like steel, copper and platinum.

iShares MSCI South Africa Index

- The World Cup, which kicks off on June 11, will put all eyes on South Africa. Although U.S. residents may find it hard to believe, the World Cup is the world’s most popular sporting event. Millions will be watching, both in South Africa and around the world.

- The influx of athletes, fans and others into South Africa for this event will increase demand for materials, energy and telecommunications.

- South Africa emerged from its first recession in 17 years in the third quarter of last year.

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Disclosures:

Tom Lydon’s clients own shares of XME.

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Tom Lydon is the editor of ETF Trends and author of iMoney: Profitable ETF Strategies for Every Investor.

Disclaimer

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