Time To Stick With Home Bias

June 11, 2018

This article is part of a regular series of thought leadership pieces from some of the more influential ETF strategists in the money management industry. Today’s article features Gary Stringer, president and chief investment officer of Memphis, Tennessee-based Stringer Asset Management.

The U.S. economy continues to steadily climb, while some global economies, especially in Europe, have faltered. U.S. firms signaled strong business activity during May, while European PMI data suggests business activity is slowing and optimism is softening. We expect this soft economic activity to continue.



Case For US Tech, Health Care

As a result, global investors might benefit from more of a U.S. equity focus as a source of revenue and less exposure to the European economically sensitive areas, such as the European banking sector. Yes, we still find foreign equity valuations attractive, but investors may want to further cushion their domestic holdings from foreign risks in the near term.

As part of a tactical allocation in a diversified portfolio in this environment, we favor technology stocks that reflect consumer and business preferences for internet-related services, such as shopping and entertainment. We also have confidence in the health care equipment industry as the world’s wealthiest society ages. Both of these areas rely heavily on the U.S. economy for revenue growth.

There are a few options available for investors looking to add dedicated exposure to the internet technology space, such as the Invesco NASDAQ Internet ETF (PNQI), the First Trust Dow Jones Internet Index (FDN) and the SPDR S&P Internet ETF (XWEB)

For investors looking to health care equipment, options we like include the iShares U.S. Medical Devices ETF (IHI) and the SPDR S&P Health Care Equipment ETF (XHE).

At the time of writing, Stringer Asset Management held FDN and XHE among its universe of ETFs included in its suite of ETF Portfolios. Stringer Asset Management is a Memphis, Tennessee third-party investment manager and ETF strategist. Contact Stringer Asset Management at 901-800-2956 or at [email protected]. For a complete list of relevant disclosures, please click here.

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