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3 Top ETFs to Cash in on the New Bull Market


After getting burned by Wall Street in the wake of the financial crisis, it’s hard to believe that a new bull market has taken off. But make no mistake — the time to jump back into the market is now. Economic indicators are pointing up, and many sectors are seeing booming growth once more.

If you’re afraid to pull the trigger, let me help you take aim by recommending three top ETFs. These low-risk, high-volume ETFs are a great way to play the hottest industries without being overly aggressive with your nest egg.

These sector-based funds allow you to zero in on the biggest opportunities without putting all your cash in just a few individual companies. It’s the best of both worlds — the low risk of diversification coupled with a sector focus that can deliver big profits.

Don’t let your doubts keep you from success in 2010. These three top ETFs are a low-risk way to cash in on the new bull market.

Top ETF #1 – iShares DJ Aerospace & Defense Index Fund (ITA)

Though he accepted a Nobel Peace Prize in December, President Barack Obama is showing that he is anything but weak on defense with plans to deploy up to 42,000 soldiers to Afghanistan. This “surge” in the region isn’t limited to just active military, though — the effort will increase the demand for defense contractors and create new opportunities for companies that provide equipment and support services to the armed forces.

Component stocks in this ETF include United Technologies (UTX), Boeing (BA) and Lockheed Martin (LMT), among others.

Top ETF #2 – iShares DJ US Pharmaceuticals Index Fund (IHE)

Big pharma has been a big player in the health care reform discussions in Congress since it stands to benefit most from any expanded coverage. There’s no doubt that prescription drugs are a much cheaper alternative than surgeries and hospital stays, and expansion of drug coverage is a key element to any bill Congress will enact. This means bigger sales for the drugmakers — and profits for shareholders.

Component stocks in this ETF include Johnson & Johnson (JNJ), Pfizer (PFE) and Merck (MRK), among others.

Top ETF #3 – iShares DJ US Telecommunications Sector Index Fund (IYZ)

Just look at holiday shopping trends for the next generation of smartphones and you’ll see that the telecom sector is also booming right now. The resilience of handset sales even amid weak consumer spending is proof of how communications spending has become a necessity and not a luxury for households and businesses, with smartphones replacing PC’s for many Americans.

Component stocks in this ETF include Verizon (VZ), AT&T (T) and Qwest (Q), among others.


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