Portfolio Review: Weisbrod Goes Nuclear

June 04, 2008

 

Weisbrod prefers natural gas to pure-play oil ETFs. "We're not dumping the oil, but we're lightening up our exposure to it and putting more into FCG," Weisbrod said.

Natural gas is going through a seasonal cycle that should support higher prices, he says. "FCG has a pretty strong short-term chart," Weisbrod said. "If oil is hit hard, this could be a good diversifier, although FCG and OIL have been moving pretty much in tandem for the past year."

Global infrastructure is also a macro trend he's playing. Weisbrod has just started investing in the SPDR FTSE/Macquarie Global Infrastructure 100 ETF (AMEX: GII). "Compared to energy, its chart is rather boring," he said. "But we think it's positioned to really kick in over the next few years. GII just seems like a good long-term play."

The portfolio is almost 60% international stocks with a heavy concentration in utilities. To complement GII, Weisbrod has been buying the Invesco PowerShares Cleantech Portfolio (AMEX: PZD). "It holds energy as well as infrastructure plays," he said. "PZD fits nicely as a diversification tool in our alternative categories."

Despite a strengthening dollar, Weisbrod still likes prospects for overseas stocks. In terms of broader-based funds, his main pick now is the iShares MSCI EAFE Value Index (NYSE: EFV). "While we're waiting to see what the market's going to do, it's nice to get a bigger dividend," he said. "And in this environment, EFV has slightly lower PE's than more growth-oriented indexes. So that can help if the market corrects sharply at some point."

Big Down Under

Weisbrod also likes to complement such diversified funds with single-country ETFs. One of his favorites is iShares MSCI Australia Index (NYSE Arca: EWA). The firm started buying it about five years ago.

"I just like the country. It's very stable and a well-run economy," Weisbrod said. "If we're not out of a bear market, it'll probably correct like most of the rest of the world. But among single-country ETFs, this is a core long-term holding in our portfolios."

STAAR has also been putting its clients lately into health care names. "We haven't been out of health care. But we're increasing our weightings now a little bit," Weisbrod said. "At this point, we're just nibbling at a couple of new positions now."

Those include: HealthShares Cancer (NYSE Arca: HHK); iShares Dow Jones US Medical Devices (NYSE Arca: IHI) and iShares NASDAQ Biotechnology (AMEX: IBB).

"Some of this is very political, so elections in November could slow down some of these areas if we systematically go to more of a socialized approach," Weisbrod said. "But eventually, with the aging demographics in this country, we're going to need more dollars invested in things like cancer research and medical devices. So we're looking at some very specific ways within the broader health care sector to play longer-term trends."

 

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