Rising oil prices have helped energy exchange traded funds pull into the lead among U.S. sector ETFs so far this year, according to Russell Investments.
The energy sector in the U.S. broad-market Russell 3000 Index reflected the highest returns (12.1%) of all sectors year to date through July 29, followed by the health care sector (9.6%) and the consumer staples sector (8.0%), the investment manager said.
Outside the U.S. in a Russell global index, the health care sector gained the highest with a 12.2% return year to date, followed by the consumer staples sector (8.4%) and consumer discretionary sector (7.0%), according to Russell.
“While the U.S. markets are holding up reasonably well as compared to other equity markets worldwide, any debt ceiling resolution would have to gradually phase in spending reduction, as not to dramatically affect the tepid economy. While the final decisions as to what sectors will be directly affected by spending-cuts are still in super-committee, certain market sectors could become attractive as weighed against others, “ said Dr. Stephen Wood, chief market strategist, Russell Investments.
“Sectors with long term prospects, such as energy that allows tangible investing in commodities, and health care that may offer some stability in a volatile market environment, are the ones we believe merit watching. While financials are currently feeling the ripple effect of what was believed to be an impending U.S. ratings downgrade, that sector also has potential to grow based on the final resolution,” Wood said.
Financial services (-3.9%) was the only sector in the Russell 3000 Index to reflect negative returns while technology (-4.1%) was the only sector reflecting negative returns in the Russell Global ex-U.S. Index year to date through July 29, according to Russell.
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Source: Russell Investments.
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