5 ETFs to watch this week

Funds tracking the German economy and consumer staples are among those in the spotlight as the eurozone debt crisis continues and the holiday shopping season hits high gear.

By TheStreet Staff Nov 28, 2011 10:36AM

Image: Canada (© Royalty-Free/Corbis)By Don DionTheStreet


Here are five exchange-traded funds to watch this week.

 

1. iShares MSCI Canada Index Fund (EWC). Sprinkled across the latter half of this week's earnings calendar are a handful of top Canadian banks. EWC, which sets aside nearly one-third of its index to the financial sector, will be heavily influenced by the performances and outlooks from institutions including the Royal Bank of Canada (RY), Toronto-Dominion Bank (TD), Bank of Nova Scotia (BNS) and Canadian Imperial Bank of Commerce (CM).

 

Canada's markets have lagged compared to the U.S., as indicated by EWC's performance against the SDPR S&P 500 ETF (SPY). Against fellow international developed markets, however, it has noticeably outperformed over the past month.

 

2. Consumer Staples Select Sector SPDR (XLP). With the start of the holiday shopping season, investors looking for exposure to consumers may be immediately drawn to discretionary stocks. However, in the face of the choppy action over the past few weeks, staples have proven to be a more reliable destination.


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Last week on ETF Profits, I explained that, while consumer discretionary firms may hold up better than other cyclical stocks in the near term, macroeconomic headwinds threaten to stifle strength across all growth-correlated industries. The defensive nature of staples will likely make a fund like XLP an attractive destination for these wearied investors.

 

During the second half of the week, auto sales numbers are slated to be released, providing investors with additional clues as to the state of the consumer. Throughout the past few years, consumers have remained resilient despite persistent economic challenges.

 

3. iShares MSCI Germany Index Fund (EWG). Those covering the European economic crisis have paid attention to the issues facing Italy, Greece and other particularly vulnerable members of the monetary bloc. Recently, however, shaky news has ignited concerns about the stronger countries of the region. For example, Germany drew investor ire during the middle of last week following news of its recent dismal bond auction.

 

The impact of Europe's economic woes is being felt across the euro bloc. As I've explained on a number of occasions, this part of the developed world is not for the faint of heart.

 

4. iShares Silver Trust (SLV). Precious metals have witnessed some choppy trading action over the past few weeks. Industry-linked players including silver and palladium have been especially prone to weakness as investors question the strength of the global growth picture.

 

Despite being a popular safe haven, gold has faced trials as it hovers around the $1,700 level. Looking to the days ahead, it will be interesting to see if global turbulence continues to weigh on physically backed products like SPDR Gold Shares (GLD) and iShares Gold Trust (IAU).

 

5. iShares Dow Jones U.S. Broker-Dealer Index Fund (IAI). The U.S. financial industry has been cast under a negative light as fearful investors question the level of exposure domestic banks have to the troubled euro zone. While broad-based funds like the iShares Dow Jones U.S. Financial Sector Index Fund (IYF) and the Financial Select Sector SPDR (XLF) have taken hits, their respective downturns are contained compared to the losses seen from IAI.

 

Boasting exposure to controversial names including Morgan Stanley (MS) and Jefferies Group (JEF), IAI is a fund I would encourage investors to monitor from the sidelines.


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