Making Money Alert: Your Q1 ETF Scorecard

The first quarter of 2014 is history, and now it’s time to do a little review of the various sector exchange-traded funds (ETFs) to show how the market performed during the past three volatile months.

The first thing to note when looking at the performance table below of representative sector ETFs is that there was little actual movement in the major domestic equities such as the S&P 500, the Dow and the NASDAQ 100 in Q1. Despite a down January and an upbeat February, the markets are just about where they were at the start of the year.

Internationally, we saw a big sell-off in the China stock market, but most of that damage occurred in the first 10 weeks of the year. Over the past couple of weeks, stocks in China and in emerging markets have seen a marked comeback, as evidenced by the chart below of the iShares China Large-Cap ETF (FXI).

Another notable performance in Q1 was the spike higher in bond prices. While most pundits were expecting interest rates, i.e. bond yields to spike higher as the Fed continues to taper its bond buying, the opposite has actually happened. The 7.64% rise in the iShares 20+ Year Treasury Bond (TLT) reflects rising bond prices in Q1. Then there was a big boost in the commodity space in Q1, with oil, gold and the major commodities indexes in general showing strong upside through the first three months of 2014.

The interesting, and somewhat counterintuitive, performance in Q1 highlights the unpredictability of markets. It also shows that the conventional wisdom in the market is often wrong.

So, as an investor, what are the best ways to take advantage of the trends we witnessed in Q1? Right now, subscribers to my Successful Investing newsletter are benefitting from several of these counterintuitive sector moves with a combination of several ETFs. If you’d like to find out more about how you can get in on the current market’s moves, simply click here.

ETF Talk: Fidelity Forays into Low-Cost Funds

Fidelity Investments is a relatively recent entrant to the exchange-traded fund (ETF) provider market. Fidelity, founded in 1946, probably is best known as one of the largest providers of mutual funds and other actively managed funds, featuring actively managed sector funds.

Now, Fidelity has thrown itself into the low-cost end of the ETF pool with an expense ratio of 0.12% for its 10 brand-new passively managed sector ETFs. Additionally, this provider is enticing consumers with no-cost commissions for its own funds and 65 iShares ETFs, as well as $7.95 online commissions for U.S. equities.

Fidelity’s ETFs include coverage of the following areas: consumer discretionary, consumer staples, energy, financials, health care, industrials, information technology, materials, telecommunications and utilities.

One of these funds, Fidelity MSCI Health Care Index ETF (FHLC), has had a profitable start, with a 5.79% return from its October inception date to the end of 2013. For the first three months of 2014, FHLC has notched market-beating returns of 6.33%, as shown below.

Fidelity’s offerings aren’t exotic. They don’t represent a market sector that you, as a retail investor, would not otherwise be able to tap. But they do represent a low-cost method of diversifying your investments by broad-based sector, which is something you may find worthwhile.

If you want my advice about buying and selling specific ETFs, including appropriate stop losses, please consider subscribing to my Successful Investing newsletter. As always, I am happy to answer any of your questions about ETFs, so do not hesitate to send me an e-mail. You just may see your question answered in a future ETF Talk.

Buy Gasoline for $1 a Gallon

If I told you where you could buy gasoline in your town for $1 a gallon, wouldn’t you go there?

Of course you would.

That’s because $1 per gallon is about a 75% discount in cost from what you pay if you’re in California. Well, it’s the same thing for investment products.

You see, the cost of owning the average mutual fund per year is much more than a comparable ETF. Stated differently, an ETF costs about 75% less than a mutual fund — and that makes a BIG difference over the course of five, 10 or 15 years.

So, go get your gasoline for $1 a gallon, and get your portfolio exposed to ETFs.

Your Monthly ETF Sector Spotlight

Want a detailed look at a different subsector of the ETF universe each month? Of course you do, and that’s why at FabianWealth.com, we provide this analysis — absolutely FREE.

This month, we take a look at our Top 10 Energy ETFs, a list that you can use to benefit from one of the biggest, and potentially most powerful, investment themes we’ve seen in the last several years, something I call the North American energy renaissance.

Thanks to technological advances such as horizontal drilling and hydraulic fracturing, oil and natural gas production companies now are able to explore and unlock U.S. energy resources in ways they haven’t before. That’s caused a huge economic boom in many sectors, and taking advantage of that boom is what many of our Top 10 Energy ETFs are doing.

To see which funds made our Top 10 Energy ETFs list, get your ETF Sector Spotlight today!

NOTE: Fabian Wealth Strategies is a Securities and Exchange Commission-registered investment adviser, and is not affiliated with Eagle Publishing.

Hill on Action

“Action is the real measure of intelligence.”

–Napoleon Hill

I know a lot of smart people, but unfortunately, many of them live their lives paralyzed by inaction. You see, when it comes to real intelligence, I agree with Napoleon Hill, who says action is the most important metric. The way I see it, life is not a spectator sport, so whatever it is you want to do, take action and make it happen.

Wisdom about money, investing and life can be found anywhere. If you have a good quote you’d like me to share with your fellow Making Money Alert readers, send it to me, along with any comments, questions and suggestions you have about my audio podcast, newsletters, seminars or anything else. Ask Doug.

In case you missed it, I encourage you to read last week’s column on rebounding emerging markets at Eagle Daily Investor. I also invite you to comment about my column in the space provided below my Eagle Daily Investor commentary.