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Feeling Helpless? Try 'Picking Your ETF Spots'

Tom Lydon|Editor, ETFTrends.com
Friday, 30 Jul 2010 | 3:25 PM ET

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

Although earnings season has been solid — 82 percent of companies reporting so far have beaten expectations — and corporate America is clearly feeling better, Americans outside of finance are still feeling the pain.

Things Looking Up?
Discussing whether the economy is half-full or empty, with Michael Cuggino, Permanent Portfolio Funds and Tim Lydon, Global Investment Trends.

Add to that the fact that many traders and investors are thinking about the waves in the ocean instead of their portfolios, and the end result is markets trading in a tight range.

It could be this way for awhile, but you’re not helpless. Just pick your spots and look for those areas that are delivering. We’ve found a few recently:

SPDR Barclays Capital High-Yield Junk: Don’t let the “junk” name throw you off — junk is anything but, right now. Issuance of these bonds is now 45 percent ahead of last year’s total at this time. In a low-yield environment, investors are easily seeing the appeal of these funds. JNK itself is yielding 9.7 percent.

SPDR S&P Dividend and

WisdomTree Emerging Market SmallCap: Both of these funds are delivering in terms of both yield and performance these days, reflecting the general strength seen in dividends. Companies are currently sitting on a lot of cash – Russell 3000 companies have $2.9 trillion in their hands, up 19 percent from a year ago. This has turned into an increase in dividends – 15 percent of those companies raised them in the second quarter, double a year ago.

iShares Dow Jones Transportation: Earnings season has delivered for this sector, and FedEx, one of the sector’s biggest players, gave a bullish forecast for the rest of the year after observing that shipping activity and global demand is beginning to pick up. Railroads are reporting a pick-up in business, as well. Transportation is a direct play on the recovery, since more goods and products need to be shipped as consumer spending resumes.

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

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