Business & Finance
Business and Finance
Business and Finance
Tue, November 30, 2010 SPDR S&P Metals & Mining, PowerShares Dynamic Pharmaceuticals, IiShares Dow Jones Transportation Average, ING FMR Diversified M
CHICAGO--([ BUSINESS WIRE ])--Today, Zacks Investment Ideas feature highlights Features: SPDR S&P Metals & Mining (NYSE: [ XME ]), PowerShares Dynamic Pharmaceuticals (NYSE: [ PJP ]), IiShares Dow Jones Transportation Average (NYSE: [ IYT ]), ING FMR Diversified Mid Cap (MUTF: [ IFDTX ]) and Gabelli Value A (MUTF: [ GABVX ]).
5 Funds to Simplify Your Portfolio
If greater than 75% of a stock's volatility is from individual stock selection, why not avoid that all together? By using sector or industry specific Exchange Traded Funds (ETF) or mutual funds an investor can isolate areas of the economy that they feel will outperform the market and put money in those companies. The added benefit is the diversification amongst many companies through a single transaction.
Now that we can easily avoid sifting through thousands of stocks we need and efficient and, more importantly, accurate tool to select areas to focus our portfolio. Fortunately the Zacks Industry Rank is perfectly suited for this task.
The Zacks Industry Rank rates industry groups based on the aggregate Zacks Rank of individual stocks within those groups. There are 217 industries and a general rule of thumb is that the top 70 are good areas to invest in.
Additionally, Zacks.com has a mutual fund rank that takes all of the guess work out of the equation. Does, it get any easier than that?
ETF's are bit simpler than mutual funds and right now miners are ranked fairly high, 38th out of 264 industries. To gain exposure in that area I am looking at SPDR S&P Metals & Mining (NYSE: [ XME ]). The fund uses a passive management style that allows for lower turnover and expenses, as well as more accurate tracking. It may be more volatile than some, with a beta of 1.7, but that goes with the territory when you are investing in this industry.
Pharmaceuticals are also doing very well. The PowerShares Dynamic Pharmaceuticals (NYSE: [ PJP ]) ETF will give you just what the doctor ordered. You wona™t get much diversification, but you will spread your sector bet across 30 U.S. pharmaceutical companies rather than having to pick and choose.
Transportation as a whole, particularly rail, offers room to outperform most other sectors. IiShares Dow Jones Transportation Average (NYSE: [ IYT ]) tracks the Dow's transport index, if you could not already tell by the name. Several industries within transportation rank higher than 50th on the Zacks Industry Rank list.
Even if you don't want to get industry specific, there are highly rated funds that offer plenty of diversification. ING FMR Diversified Mid Cap (MUTF: [ IFDTX ]) is a top-rated fund that takes a long-term view of capital growth. The fund can have up to a quarter of its assets in foreign companies, so you will get some international diversification. IFDTX offers a bit less volatility than some growth funds, with a beta around 1 and an expense ratio of 1.04%, which is 43 bps better than the category average. We currently have a Zacks #1 Rank (Strong Buy) on this fund.
If you are more inclined to go for value, that Gabelli Value A (MUTF: [ GABVX ]) is worth a look. The fund seeks out investments in companies that are undervalued, obviously, relative to its private market value. GABVX's manager also pays special attention to stocks that are going through a merger or other reorganization. Babelli Value is also a Zacks #1 Rank (Strong Buy).
About Zacks
Zacks.com is a property of Zacks Investment Research, Inc., which was formed in 1978 by Len Zacks. The company continually processes stock reports issued by 3,000 analysts from 150 brokerage firms. It monitors more than 200,000 earnings estimates, looking for changes.
Then when changes are discovered, theya™re applied to help assign more than 4,400 stocks into five Zacks Rank categories: #1 Strong Buy, #2 Buy, #3 Hold, #4 Sell, and #5 Strong Sell. This proprietary stock picking system; the Zacks Rank, continues to outperform the market by nearly a 3 to 1 margin. The best way to unlock the profitable stock recommendations and market insights of Zacks Investment Research is through our free daily email newsletter Profit from the Pros. In short, ita™s your steady flow of profitable ideas GUARANTEED to be worth your time. Get your free subscription to Profit from the Pros at: [ http://at.zacks.com/?id=7298 ]
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