3 ETFs for Undervalued Sectors

THE VALUE INVESTOR: Energy, basic materials and financial services are currently the three most undervalued equity sectors. We highlight three ETFs to play these contrarian bets

Holly Cook 21 July, 2015 | 9:14AM
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Holly Cook: The three most undervalued sectors globally at the moment according to Morningstar's quantitative equity data are the basic materials sector, the energy sector and the financial services sector. So, I've picked out three ETFs that investors might want to look at if they want exposure to those sectors, but remember these must be niche players. They are quite high risk because they are looking specifically at a sector and aren't therefore broadly diversified.

So, if you wanted exposure to the basic materials sector, one offering is the iShares Global Timber & Forestry ETF which has a ticker of WOOD. This offers exposure to the 25 largest and most liquid companies that are supplying forests and timberland and it comes with an ongoing charge of 0.65%.

For exposure to the energy sector, one ETF that you might want to look at is the Lyxor MSCI World Energy ETF which has a ticker of NRGG and this is offering exposure to companies that are operating across the whole energy sector around the world and comes with an ongoing charge of 0.4%.

Last but not least, for exposure to the financial services sector, the Source STOXX Europe 600 Optimised Banks ETF, which has a ticker of X7PP, also offers exposure to many of the largest and most liquid banks in Europe and this comes with an ongoing charge of 0.3%.

Do remember, these are niche players, but these are possible ideas for those wanting exposure to these three undervalue sectors.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar
Rating
Invesco STOXX Eurp 600 Opt Banks ETF GBP5,216.50 GBX-0.24Rating
iShares Global Timber&Forestry ETF $ Dis GBP2,396.50 GBX0.08Rating
Lyxor MSCI World Energy TR ETF C USD GBP22,883.19 GBP0.72Rating

About Author

Holly Cook

Holly Cook  is Manager, Morningstar EMEA Websites