Investing Strategists’ Top ETF Buys For 4th Quarter


 Andrew Hill, president and co-founder of Andrew Hill Investment Advisors in Naples, Fla.: iShares S&P National Municipal Bond (MUB).

With higher tax rates this year, investors would expect municipal bonds, which generally offer tax-free income, would be doing well this year. Actually, municipal bonds have underperformed the overall bond market, since June. Most sectors of the bond market have performed poorly since the Federal Reserve began discussing the potential for a change in policy, but municipal bonds have been particularly weak. The weakness can be attributed to: 1) The bankruptcy of Detroit, which spooked investorsover the issue of how bondholders will be treated; and 2) There have been a significant amount of mutual fund redemptions, a sign of emotionally driven selling.

Andrew Bellak of StakeHolders Capital likes clean energy ETFs that have exposure to such alternative energy sources as wind turbines.
Andrew Bellak of StakeHolders Capital likes clean energy ETFs that have exposure to such alternative energy sources as wind turbines. View Enlarged Image

Many quality municipal bonds are actually yielding more than taxable issues of similar credit quality. For example, MUB currently yields about 3% compared withiShares Barclays Aggregate Bond (AGG), currently yielding about 2.4%. In addition to the yield advantage over taxable bonds, the improvement in home values will potentially improve the finances of state and local governments, thus improving credit quality.

 Andrew Bellak, CEO of StakeHolders Capital in Amherst, Ma.: PowerShares Global Clean Technology (PZD), PowerShares Global Alternative Energy (PBD).

Some megatrends make these ETFs very compelling: 1) Population growth is expected to reach 9 billion by 2030 (we’re close to 7 billion now) and 2) pollution and climate change.

With a growing population, we have greater pressure to use our planet’s resources: water, energy, flora and fauna, fossil fuels, and basic materials such as metals. Unless we have a disruptive technology like waste to energy or energy from cold fusion, or cheap safe power storage to save renewables, we will not be able to use our ingenuity and innovation to avoid shortages.

There is better waste-to-energy technology under development, which will help, but will never be a stand-alone solution. Reducing and eliminating pollution just makes common sense even if it did not contribute to causing climate change, which it does.

Therefore clean technology has a bright future. The same goes for alternative or renewable energy. It is cleaner, safer and geopolitically less risky. These companies will be the target for takeovers by traditional, cash-rich, fossil-fuel companies, who want to buy their way into the game and remain an energy player.


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