Three ETFs To Watch This Week: XLP, CHIE, SWH

by on April 25, 2011 | ETFs Mentioned:

Last week marked a shortened trading week in observance of Good Friday, but that does not mean that investors were left with an uneventful four days. On the contrary, markets went haywire last week as a downgrade of the outlook on U.S. debt crushed markets one day, only to see them rally on strong earnings for the latter half of the week. Along with general equities rising, both gold and oil have continued to trend higher, most notably with gold breaking through the $1,500 per ounce barrier and still going. Mid way through earnings season, investors have gotten a taste for how some of the industry’s largest firms have fared over the past 12 weeks.

This week will continue to focus on earnings reports, as major names like Procter & Gamble are preparing to release key data on their recent performance. Though, as we have seen in the past week, namely with General Electric, hitting you marks does not necessarily mean a rise in share price, making these reports particularly volatile [see also Active ETF Blockbuster: PIMCO Files For Total Return Fund]. In light of the busy days ahead, investors should look for the following three ETFs to be in focus throughout the week:

Consumer Staples Select Sector SPDR (XLP)

Why XLP Will Be In Focus: This Thursday, blue chip leader Procter & Gamble (PG) will be readying their earnings report from their most recent fiscal quarter. Analysts are calling for the company to haul in EPS of $0.97 with revenues of just over $20 billion. The company has met their marks for three of the last four quarters, but did not stray more than 3% in either direction from professional predictions during that time period, meaning their report may not be as volatile as other companies. PG comes in as the top holding of XLP, making up almost 15% of the entire product’s holdings. XLP dedicates its assets to an index which includes numerous industries involved in consumer staples. Along with PG, Coca & Cola (KO), XLP’s fourth largest holding, and PepsiCo (PEP), XLP’s eight largest holding, will also be releasing their earnings this week, making it a key fund to monitor as the days progress [see also Inflation-Fighting ETFs Back In Focus].

Global X China Energy ETF (CHIE)

Why CHIE Will Be In Focus: On Tuesday, one of China’s leading energy firms, China Petroleum & Chemical (also known as Sinopec Limited) will be releasing their quarterly earnings. While this report would normally be off the radar of U.S. investors, with the help of specialized ETPs, like CHIE, investors can now gain exposure to, and make plays on large international firms like this one. In 2010, Sinopec Limited was ranked 7th in the Fortune Global 500, making it the first Chinese Company to hold a top ten position on that coveted list. CHIE, which strictly focuses on the energy sector of China, holds Sinopec as its third largest security, making up over 9.5% of the ETF. The nature of this earnings report will likely dictate the performance of this fund on Tuesday, and the remainder of the week [see also Three ETFs To Watch As China Invests In The Euro Zone].

HOLDRS Merrill Lynch Software (SWH)

Why SWH Will Be In Focus: Late in the week, Microsoft (MSFT) will join numerous companies in releasing their most recent quarter’s earnings. The software giant has hit its marks for the last four reports, and by over a minimum of 6% to boot. Investors will likely have high expectations from the company, but many will also be nervous to see how the Windows 7 Smartphones have performed, now that they have their first full quarter under their belt. Microsoft accounts for approximately 16% of the total assets of SWH, which has gained over 10.7% in 2011 alone. With Microsoft being a tech giant, and having a firm grip on a significant amount of SWH’s assets, its earning release will have a heavy influence on this product as the week comes to a close [see also Internet ETFs: Five Ways To Play].

Disclosure: Photo courtesy of Agnieszka Bojczuk. No positions at time of writing.