Characteristics of ETFs Near 52-Week Highs: Defense
Social media, alternative energy and biotech collectively demonstrate that a risk-on mindset remains. Nevertheless, it is impossible to ignore recent strength in traditionally defensive equities. Recent headliners on the 52-week high list include: PowerShares S&P 500 Low Volatility (SPLV), PowerShares S&P 600 Low Volatility (XSLV), Guggenheim Defensive Equity (DEF) and iShares USA Minimum Volatility (USMV). The latter exists in most client portfolios.
First quarter earnings are likely to disappoint as companies blame the weather for underachievement. At the same time, the Federal Reserve is expected to continue tapering $10 billion from its bond-buying program, adding additional uncertainty in the near-term. These are some of the reasons why I continue to favor non-cyclicals with relative strength like SPDR Select Health Care (XLV) as well as low volatility ETFs like iShares USA Minimum Volatility (USMV).