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"Defensive" sectors
closer
07-06-2008, 12:33 PM | Post #2536035
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Here are the year-to-date returns of three index funds that track so-called defensive sectors: Consumer Staples (XLP -6.5%), Health Care (XLV -12.83%), Utilities (XLU -3.23%). I think utilities have held up better possibly because they have the greatest ability to pass along price increases to their customers who basically have to pay their bills or lose electricity, gas, water, etc. I think the health care sector has been least able to pass along costs and faces more regulatory headwinds from the Democratic Congress. Consumer staples have been a big disappointment as P&G and Coke got clobbered (Fido's FDFAX is down -9.96% year to date);their ability to pass along commodity costs seems to be running into consumer resistance. As for health care stocks, it's obvious to me that an index fund isn't going to help and I simply don't have the expertise to pick individual stocks. I'm overweight utilities in my Roth IRA and consumer staples in my 401(k). Of the three sectors, I think utilities might be the most resistant to inflation and recession.
Topics
401(k)
Consumer Staples
health care
Roth IRA
water
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