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Worst ETFs To Own For 2010

19 October 2009 One Comment

Continuing our series on ETFs to own in 2010, this time we’re going to look at the ETFs that you should definitely not buy, and if you like to be a little more risky, you may even choose to sell these short.  If you missed the first article, be sure to check out the Best ETFs to Buy For 2010.

It is my opinion that 2010 will not be a year of a healthy robust economy, instead we will still face significant structural problems in our economy.  As such, there are areas that I would recommend staying away from.

Financials

I’m not recommending you stay away from financials because I think they’re going to go lower (although they could very easily do so), I’m recommending to stay away from them because it’s impossible to know where these things should be valued.  Oh yeah, and the fact that the toxic assets are still sitting somewhere.  Just because we changed the accounting rules doesn’t mean that these assets are gone.

Financial ETFs:

  • iShares S&P Global Financials Sector Index Fund (IXG)
  • iShares Dow Jones U.S. Financial Sector Index Fund (IYF)
  • iShares Dow Jones U.S. Financial Services Index Fund (IYG)
  • Financial Select Sector SPDR Fund (XLF)

Retailers

While I still like companies such as Wal-Mart, Target and Costco, I definitely do not like many others.  America has too much retail and I expect that in the new normal that will extend through 2010, many of these stores will need to close.  As such, it should be an ugly year for retailers in 2010.

Retail & Consumer Goods ETFs:

  • Consumer Discretionary Select Sector SPDR Fund (XLY)
  • SPDR S&P Retail ETF (XRT)
  • Claymore/Robb Report Global Luxury (ROB)

Real Estate

The real estate story won’t be over in 2010.  While housing prices may bottom, we might have not even seen the beginning of the commercial real estate disaster.  Even with home prices bottoming, they may not recover as some expect.  As such, I’m looking to avoid real estate in 2010.

Real Estate ETFs:

  • iShares Dow Jones US Real Estate (IYR)
  • SPDR Dow Jones REIT (RWR)
  • iShares FTSE NAREIT Retail Cp Idx (RTL)
  • iShares FTSE NAREIT Industrl/Offc Cp Idx (FIO)
  • First Trust S&P REIT (FRI)
  • iShares FTSE NAREIT Retail Cp Idx (RTL)

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