5 ETFs to watch this week

Broad-market index funds start December with a bang, and an agriculture fund offers a good option for conservative investors.

By TheStreet Staff Dec 6, 2010 10:15AM

Tools for your stock portfolio © CorbisBy Don Dion, TheStreet


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


1.    SPDR S&P 500 ETF (SPY)

 Although U.S. markets stumbled in November, hindered by fears of euro debt contagion and concerns about China's steps to curb inflation, the SPDR S&P 500 ETF and other broad market index-tracking ETFs started off the final month of 2010 with a bang.


As we head into this week, it will be interesting to see if funds such as SPY, SPDR Dow Jones Industrial Average ETF (DIA) and PowerShares QQQ (QQQQ) can hold onto their gains.


Throughout the year, we have seen time and again evidence of the market's resilience. Despite the turmoil that continues to rage across many regions of the globe, I remain confident that the economic recovery is intact.

2.    Market Vectors Indonesia ETF (IDX)

As an emerging market, Indonesia is prone to more volatile market fluctuations than developed nations. This has become evident throughout the past few weeks as the Southeast Asian nation has been working to combat the destructive effects of an increased spell of volcanic activity.


Concerns about Mother Nature's total impact on the nation have caused IDX and the iShares MSCI Indonesia Investable Market Index Fund (EIDO) to perform in a rollercoaster-like manner.


While its recent performance has been gut-wrenching, in the coming week IDX and EIDO may be able to find some stability. On Friday, Indonesian scientists downgraded their volcano alert level.


3.    PowerShares DB Agriculture Fund (DBA)

It has not seen the same wild swings as single commodity exchange-traded notes such as iPath Dow Jones UBS Sugar Total Return Subindex ETN (SGG) or the iPath Dow Jones UBS Cotton Total Return Subindex ETN (BAL), but DBA is the ideal agriculture futures-backed product for conservative investors looking for a safe way to follow the industry's popularity.


An agriculture one-stop shop, DBA's index tracks a collection of 11 different products. Cotton and sugar together represent 15% of the fund. Also found in the index are cocoa, lean hogs and wheat.


The performance of single crop funds has been exciting to watch, but investing in them can be tricky. DBA is a far safer option for navigating agriculture.


4.    Consumer Discretionary Select Sector SPDR (XLY)

The holiday gift giving season is among us and investors have a number of tools at their disposal that allow them to capture the strength of retail and other consumer-focused sectors of the market.


I have highlighted funds such as First Trust Dow Jones Internet Index Fund (FDN) and SPDR S&P Retail ETF (XRT) as appropriate tools for investors looking to tap into specific subsectors of the consumer-focused industries.


XLY is another product that can be added to this list. Unlike the products listed above, XLY paints the consumer region of the market with broad brushstrokes, providing a well diversified, more conservative play.


5.    ETFS White Metals Basket Trust (WITE)

Late last week, ETF Securities unveiled the newest product in its growing line of physically-based precious metals ETFs. Designed to track the white metals (silver, platinum, and palladium), WITE marks the second precious metal basket product from the firm. Like the ETFS Physical Precious Metals Basket Shares (GLTR), its first multiple metal fund, there is a good chance that this new fund will gather strength quickly.


Investor sentiment will play a big part in directing the performance of silver, platinum and palladium throughout the coming week. Because they are used extensively in manufacturing and other industries, these metals head higher in times of market confidence.


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