With the final quarter of the year just a couple of weeks away, it’s time for some sector rebalancing if you hope to set your portfolio up for a strong finish to what has been a pretty great year for U.S. equities.
Markets are at all-time highs after the Federal Reserve stood pat on it’s bond-buying program. For the year-to-date, the benchmark S&P 500 is up 21% on a price basis through Sept. 19. Add in dividends, and the broader market’s total return comes to 23% for the year so far.
Any investor indexed to the S&P 500 has to be happy — unless, of course, they missed out on even more upside by failing to overweight the hottest sectors.
After all, within the S&P 500, the healthcare sector leads all comers with a total return of 32% for the year-to-date. On the other side of the ledger sits the telecommunications sector, with a total return of 9.3%.
If you’re looking to rebalance your tactical allocation to close out the year, sector funds (be they mutual funds or ETFs) offer the best way to place diversified, relatively inexpensive sector bets. With that in mind, here are the three sectors you should pile into for year-end — and the best sector funds to do so.