Technology Sector Doing the Best YTD, Energy the Worst

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Here are the statistics of the SPDR sector ETFs from 2011-12-30 through last Friday, 2012-07-06:

Sector Rotation 2012-07-06

There are two sectors we generally overweight, Technology and to a lesser extent, healthcare. We often use Vanguard Information Technology ETF (VGT) and Vanguard Health Care Inv (VGHCX). Technology has been the best performing sector so far this year.

Energy has been the worst performing sector. Despite its poor performance during the first half of the year, we think hard asset stocks in general and energy in particular should do well over the next few years. Oil prices are at a relative low thanks to expansion of unconventional extraction methods and off-shore drilling. Consumption in the United States and Europe are about the same as a decade ago having grown and then shrank with the financial crisis and recession.

The energy sector currently has the lowest PE Ratio, another promising indicator. There are many mutual funds and ETFs which  invest in energy, but we often use Vanguard Energy Inv (VGENX).

While you may be discouraged by the returns of the energy sector YTD, this would probably not be the best time to get out. And if you are out, this is a good time to get back in.

Related Articles

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  2. We Added a Sector Tilt to our Foreign Dynamic Tilt (November 2020)
  3. The Case for Investing in Energy Companies
  4. Energy Stocks Have Been Disappointing Recently (April 2020)
  5. This Month, We Removed the Energy Overweight from Our Allocations (October 2020)

We have no secret ingredient at Marotta Wealth Management. Instead, we openly and publicly publish our strategies as articles on our website.

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President, CFP®, AIF®, AAMS®

David John Marotta is the Founder and President of Marotta Wealth Management. He played for the State Department chess team at age 11, graduated from Stanford, taught Computer and Information Science, and still loves math and strategy games. In addition to his financial writing, David is a co-author of The Haunting of Bob Cratchit.