In addition, if you held such funds then, you had comparatively little invested in out-of-favor energy and basic-materials stocks, which became the stars of this decade. ETFs allow you to put money into market sectors that look undervalued without having to pick individual stocks or pay the high fees charged by mutual funds that specialize in an industry. Let's say you think that technology stocks, which have underperformed the broader market over the past five years, look like bargains.
And here's what I said about making Sector Bets with ETF in My New Hypothetical Asset Allocation:
Sector Bets: I typically screen for some under performing sectors. That's why I stumbled into utilities 4 years ago. That would have been one of my best performers. I love technology so that's a must for me. I'd take a health care one as an aging baby boomer play. Energy as a hedge against rising gas prices in the future sounds like a smart plan. I'd grab a financial one as well - what's a better place to put your money than with people who know money?
Maybe I should write for Money Magazine?
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