As 2013 begins it seems that the global economy can no longer do wrong. Markets have been bullish since the first day of the year, the European Union and the United States are starting to turn their banks and governments in the right direction, and on top of all of this China reported record manufacturing growth in the fourth quarter of 2012. As economies around the world start to get their financial legs back, leaders in consulting are expecting to see a huge trend towards manufacturing and infrastructure. Earlier this year, Deloitte highlighted some countries that may be sensible investments in the short and long haul [see also Favorite ETF Positions For 5 Super Investors].
Below we list seven ETFs that each offer interesting plays on Deloitte’s manufacturing predictions.
1. China Materials ETF (CHIM)
This ETF is designed to reflect the performance of the materials sector in China and is comprised of selected companies that have their main business operations in the materials sector and are domiciled in China or have their main business operations in this country. With major holdings in mostly medium and large steel, copper and chemical corporations, CHIM is well positioned for the manufacturing market upswing [see ETFs For The World's Most Valuable Emerging Markets Brands].
2. Germany AlphaDEX Fund (FGM)
By employing the AlphaDEX stock selection methodology that uses fundamental growth and value factors to objectively select stocks from the S&P Germany BMI universe this ETF may generate positive alpha relative to traditional passive indices. Focusing on basic materials and industrials, this fund also has a variety of financial and consumer cyclical funds to maximize returns.
3. Industrial Select Sector SPDR (XLI)
This U.S.-specific fund features a variety of industrial specializations, from aerospace defense and electrical equipment to machinery and construction. With a three-year return of 41%, this fund has already proved that investing in industrials can lead to huge payoffs [see 3 Defensive Plays For The Fiscal Cliff Fakeout].
4. India Infrastructure ETF (INXX)
Comprised of 30 leading infrastructure firms determined to be representative of India’s infrastructure industries, INXX allows for great insight into this niche market. As the developing economy starts to pick up again, top holdings like Tata Motors, Power Grid Corporation and Idea Cellular have the potential to see stellar returns.
5. Brazil Infrastructure Index Fund (BRXX)
Much like INXX, this Brazilian infrastructure fund uses a handful of funds to gain insight into the market sector conditions. Focusing more on utilities and real estate than other infrastructure funds, BRXX also has the potential to take off as emerging markets start back onto the road to recovery [see Tough Road For Utilities ETFs?].
6. MSCI South Korea Index Fund (EWY)
By trying to match the performance of the South Korean equity market, EWY has also devoted more than a third of its fund to technology firms. Companies like Samsung, Hyundai Motor and LG Chemicals will be a part of the manufacturing upswing back bone, as a new segment of consumers emerges with the rising Asian middle class.
7. Canada AlphaDEX Fund (FCAN)
Another AlphaDex Fund, FCAN is made primarily up of energy and basic material firms based in Canada. Since its inception in February 2012, this fund has suffered from the slow pace of the developed market recovery, but should turn over a new leaf later this year.
Disclosure: No positions at time of writing