Williamstown, MA, October 03, 2008 --(PR.com
)-- Ongoing market turmoil has paralyzed some investors and spurred others to turn back to basics in a hunt for bargain stocks. In the midst of the current financial chaos, some consumer products have begun to gain their footing, proffering dividends and value in an overleveraged economy. In the latest edition of ETF Momentum Tracker, (http://www.fidelityadviser.com/readMe_ETF.asp ) publisher Don Dion profiles iShares’ Dow Jones U.S. Consumer Goods (IYK), an ETF that has moved steadily up his Sector Momentum Table in recent months.
“While other market sectors have fallen victim to recent volatility and the ongoing financial crisis, consumer goods have proven exceptionally steady in difficult times—a trend that has been mirrored by iShares’ Dow Jones U.S. Consumer Goods (IYK),” Dion said. Recently, IYK has made significant gains in Dion’s ratings, moving from the No. 29 spot on July 1 to the No. 7 position on September 23. http://store.fidelityindependentadviser.com/etf1yr.html
IYK tracks the value of domestic consumer goods stocks included in the Dow Jones U.S. Consumer Goods Index. IYK’s index measures the performance of a wide range of consumer goods products—from automobiles to beverages—and is rebalanced to reflect the capitalization of index members. As of September 29, IYK’s 149 components had helped the fund outperform a dismal market in 2008—with IYK dropping only 7% while the S&P faltered more than 16%.
“IYK’s performance can be largely credited to IYK’s components, which have a good track record of paying their dividends,” Dion noted. “IYK’s components also provide a defensive play against market turmoil,” Dion added, while some items become expendable in periods of economic strain, certain consumer goods categories—like tobacco and alcohol—are traditionally categorized as ‘defensive’ stocks.”
With Philip Morris and Altria Group among its top ten components, IYK has a 13.69% fund concentration in tobacco. Philip Morris—IYK’s fourth- largest holding at 8.03%—sells products in 160 countries and generated more than $55 billion in revenue and $8.9 billion in profit in fiscal 2007. PM’s management expects a long-term earnings-per-share growth of 10% to 12%, a continued growth that could garner returns for IYK.
“Many of my clients ask if high dividend equities will continue to pay if the financial crises gets worse,” Dion said. “As I recently discussed with Federated Investors’ Phil Orlando, there are a lot of factors that come into play.” http://www.dionmm.com/include/thm/script/thm.py/
Does Dion see IYK’s momentum continuing? “While these products might not offer as much bounce on an upswing, they present an opportunity to bargain hunters looking to scoop up undervalued products amid the negative sentiment,” Dion said, “IYK is comprised of household names that have consistently performed over time—names that could continue to offer the most comfort in the face of crisis.”
ETF Momentum Tracker is a member of Fidelity Independent Adviser’s family of financial publications. With more than 70,000 subscribers in the United States and 29 other countries, Fidelity Independent Adviser publishes four monthly newsletters and three weekly newsletters. Its flagship publication, Fidelity Independent Adviser, has been published monthly for 11 years and reaches 40,000 subscribers. http://store.fidelityindependentadviser.com/etf1yr.html
Don Dion, publisher of Fidelity Independent Adviser, is also president and founder of Dion Money Management, a fee-based investment advisory firm to affluent individuals, families and nonprofit organizations, where he is responsible for setting investment policy, creating custom portfolios and overseeing the performance of client accounts. Founded in 1996 and based in Williamstown, Massachusetts, Dion Money Management manages assets for clients in 49 states and 11 countries. A licensed attorney in Massachusetts and Maine, Mr. Dion has more than 25 years’ experience working in the financial markets, having founded and run two publicly traded companies before establishing Dion Money Management. http://www.dionmm.com/