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3 High Demand ETFs: Can You Explain The Investor Confidence?

Momentum appears to be ahead of sense in several sectors

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iShares NASDAQ Biotechnology (IBB). For years, I have been advocating non-cyclical sectors that are less tied to interest rates. It has led to client ownership of funds like SPDR Select Healthcare (XLV), PowerShares Pharmaceuticals (PJP) and iShares Aerospace and Defense (ITA). Yet, in spite of clear-cut relative strength in the ETF world, I have not chosen to board the biotech bandwagon in its purset form.

Funds like SPDR Biotech (XBI) and IBB have literally defied gravity better than Sandra Bullock in a space suit. Does it make sense to buy a sub-sector that has become so speculative, that it now trades at a 60% premium to a fully valued market? Is it it sensible to embrace a sub-sector investment with a price-to-book (P/B) north of 11 and a trailing price-to-earnings (P/E) of 42? Or is the biotech boom showing shades of dot-com mania in 1999?

IBB Versus The Field

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Disclosure StatementETF Expert is a web log (”blog”) that makes the world of ETFs easier to understand. Gary Gordon, MS, CFP is the president of Pacific Park Financial, Inc., a Registered Investment Adviser with the SEC. Gary Gordon, Pacific Park Financial, Inc., and/or its clients may hold positions in the ETFsmutual funds, and/or any investment asset mentioned above. The commentary does not constitute individualized investment advice. The opinions offered herein are not personalized recommendations to buy, sell or hold securities. At times, issuers of exchange-traded products compensate Pacific Park Financial, Inc. or its subsidiaries for advertising at the ETF Expert web site. ETF Expert content is created independently of any advertising relationship.

Article printed from InvestorPlace Media, http://investorplace.com/2014/03/etfs-ibb-edw-ewi-scz-ecb/.

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