Author: Nikki-Lee Birdsey
Estimated read time: 2 minutes
Publication date: 17th Jan 2020 14:20 GMT+1
This year’s long running bull market continues, and investors may have to look harder to find ways to best market returns. If you are willing to take on more risk, adding more sector funds to a diversified portfolio might give your 2020 investments an advantage.
On Wednesday, U.S. President Trump signed the much-awaited U.S.-China trade deal with Chinese Vice Premier Liu He. The market reacted to the news with record highs. All three major indexes soared: the S&P 500 up 0.33%, the Dow by 0.55% and the Nasdaq up by 0.33%. Though many investors wonder when this record-breaking bull market will end.
The U.S. economy added 145,000 new jobs in its final report of 2019, but it’s clear the United States is a service economy driven by consumers and not a manufacturing economy. Overall manufacturing jobs still look weak.
Here are three industries to invest in that are not concentrated in manufacturing.
Biotech sector ETFS: Despite recent scandals with big pharma’s role in the U.S. opioid crisis that included pharma giants taking big hits in settlements, pharma is still an attractive space. Its continual appetite for revenue growth means larger pharma companies are always looking for acquisitions. Smaller biotechs with drugs nearing market can be snapped up by larger companies, meaning you could buy at a bargain. The iShare Biotechnology ETF (NASDAQ: IBB) and SPDR S&P Biotech ETF (AMEX: XBI) are potential places to start looking at.
Marijuana: The burgeoning marijuana industry now has several ETFs concentrated in the marijuana space. Cannabidiol, or CBD, the compound found in hemp plants, is now legal in 50 U.S. states with the market growing at 132%. According to one Brightfield Group report, the market could reach $22 billion by 2022. ETFMG Alternative Harvest ETF (AMEX: MJ) or The Cannabis ETF (ARCA: THCX) are two sector ETFs to consider with good fundamentals.
Real Estate Investment Trusts: Interest rates are at historic lows making real estate a currently booming sector. Net-lease real estate investment trusts, which are leased to single tenants who pay property taxes, maintenance and insurace in addition to rent, tend to have higher dividend yields than typical REITs. Global Net Lease (GNL) is a global firm with net-lease industrial and office properties and a 10.4% yield. Net-lease REITs can potentially off-set the risks associated with the sometimes volatile real estate sector.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
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