5 ETFs to watch this week

Funds tracking commercial real estate and retail are likely to be active.

By TheStreet Staff Dec 20, 2010 10:41AM

Tools for your stock portfolio © CorbisBy Don Dion, TheStreet


Here are five ETFs to watch this week.


1. SPDR S&P Retail ETF (XRT)

Retail has been an exciting region of the market to watch this holiday season. As we head into the final stretch, malls will likely be packed with shoppers seeking last-minute gifts.


The anticipation of the holidays will make XRT an interesting fund to watch. The fund could also see some earnings-related action. Throughout the middle of the week, index constituents including Carmax (KMX), Finish Line (FINL) and Walgreens (WAG) are scheduled to release their most recent quarterly earnings reports.


2. SPDR S&P Homebuilders ETF (XHB)

There is no shortage of economic data coming through the wires this week.


XHB and other real-estate-focused ETFs will be in focus on Tuesday and Wednesday as existing-home sales and new home sales data points are released.

Real estate remains a tricky sector to tame, and as I've explained, I see REIT-backed ETFs such as iShares Cohen & Steers Realty Majors Index Fund (ICF) as more promising endeavors than products focused on residential homebuilders.


Last week, Sam Zell offered some encouraging words for the REIT and commercial real-estate industry. Pointing to the fact that this industry's supply growth has been stagnating recently, he forecast that the value of existing property is set to rise.


3. Market Vectors High Yield Municipal Bond ETF (HYD)

Municipal bonds have faced hurdles in recent weeks as the sovereign debt issues in Europe remind U.S. investors of the fiscal situations facing the nation. The jittery sentiment toward this region of the market has caused funds such as HYD to perform in a roller-coaster-like fashion.


As we head into this week, HYD may be exciting to watch. However, given the fund's whipsaw action last week, I wouldn't advise investors to try their luck with this fund. When it comes to fixed income, there are a wide collection of less volatile bets that are more appropriate for a long-term position.


4. iPath Dow Jones UBS Sugar Total Return Subindex ETN (SGG)

Sugar's dramatic ascension throughout the latter half of 2010 was interrupted in early November when prices took a heavy hit. The downward action was short-lived, however, and after only a few days, prices stabilized and have returned to their upward path.


As we head into this week, SGG appears on its way to revisit pre-breakdown levels. It will be interesting to see if the fund can overtake them and head higher, locking in new highs.


Conservative investors looking for a safer way to access sugar's rally should turn to the PowerShares DB Agriculture Fund (DBA). DBA sets aside 12% of its portfolio to sugar futures contracts.


5. Market Vectors Vietnam ETF (VNM)

December has been volatile for the Vietnam ETF. The first part of the month was marked by impressive strength. As investors poured into emerging markets, VNM rallied hard, surpassing previous 2010 highs. However, last week, the fund hit a roadblock, pressured by a Moody's downgrade. In response, the fund made a dramatic reversal and tumbled back to levels seen at the end of May.


VNM's action over the past few weeks highlights the volatile nature of emerging and frontier markets. Investors should use caution when taking on exposure to these ETFs.


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