Berkshire Hathaway is a holding company owning subsidiaries engaged in various business activities that acts much like an ETF. Its segments include Insurance, railroad system, Energy, which includes regulated electric and gas utility; Manufacturing, Service and retailing, aviation pilot training and various retailing businesses, and Finance and financial products, transportation equipment, manufacturing and leasing, and furniture leasing.
Sector ETFs
XLK includes market segments like IT services, wireless telecommunication services, and semiconductors to name just a few. The fund invests in the who’s-who of the U.S. tech sector, with major holdings in companies like Apple and IBM. The fund splits its assets mainly between the technology and communication services sectors, while allocating mainly to giant and large cap firms. One of the major strengths of this ETF is the fact that it does not single out a particular sector; rather it invests in companies from all across the technology sector.
offshore oil rig at sunset
XLE is U.S. energy industry, including many of the world’s largest oil producers. Compared to other energy options, XLE is impressive in terms of both cost efficiency and liquidity; investors can generally expect to execute at penny wide spreads. But like many funds offering exposure to the energy sector, XLE maintains some concentration issues, as a few stocks account for big chunks of the total portfolio.
SMH tracks the overall performance of the 25 largest, U.S. listed companies that produce semiconductors, a crucial component of modern computing. Semiconductor chips act as the brains to numerous devices that we rely on today, including smartphones, calculators, computers, and much more. As technology continues to improve and expand, these chips will invariably be in demand to help power new devices. The fund focuses on U.S. stocks entirely, offering investors concentrated exposure to America’s semiconductor industry. Investors should note that this fund is equally split between giant, large, and mid cap size companies,
IBB biotech sub-sector of the health care industry, serving up access to a group IBB is primarily focused on U.S. stocks, though a smattering of international firms adds some degree of international diversification. This biotech ETF casts a considerably wider net that the other ETF options for exposure to the space, investing in more than 100 stocks. That feature can be particularly important in the biotech space, where company-specific developments can send a single stock soaring. IBB is somewhat top-heavy, but generally
XLU utilities sector is a low volatility and relatively high distribution yields, is useful for establishing low risk equity exposure or for enhancing the current returns generated by the equity side of a portfolio. XLU is probably most appealing to those implementing a sector rotation strategy or looking to establish a tactical tilt towards this low beta sector of the U.S. market. Those building a long-term, buy-and-hold portfolio will likely achieve utilities exposure through broad-based equity funds
XLI: U.S. industrials sector offers access to transportation firms, commercial and professional services, and manufacturers of capital goods. Given the sector-specific focus, XLI likely doesn’t deserve a core allocation, but may be useful as a means of implementing a tactical tilt towards the industrials sector for a sector rotation strategy. The primary appeal of XLI lies in the impressive liquidity; used widely as a trading vehicle by active investors, XLI will generally feature very narrow bid-ask spreads. The depth of the XLI portfolio, however, leaves something to be desired. This ETF has far fewer holdings than options such as VIS, FIL, and IYJ, and also maintains a big weighting in GE.
XLB U.S. materials sector provides indirect exposure to commodity prices through the stocks of companies engaged in the extraction or production of natural resources. Because the materials sector often accounts for a small portion of broad-based benchmarks, XLB may be a useful tool for long-term investors looking for more balanced exposure to the U.S. equity market. It can also be handy for those looking to implement a shorter-term tilt towards the materials sector. Like most Sector SPDRs, XLB’s appeal lies in its cost efficiency and liquidity; it is among the cheapest funds in the Materials
This ETF is focused on the U.S. homebuilding industry, and as such offers exposure to a corner of the domestic economy that tends to be cyclical in nature. In addition to pure play homebuilders, this fund includes companies related generally to the homebuilding industry, such as Pier One. For investors seeking exposure to the homebuilding industry–or the closest thing to it available in an ETF wrapper–we think XHB is the best option out there. This fund is more cost efficient than other options such as PKB or ITB, and the equal weighting methodology ensures exposure is spread evenly across component companies.
GDX offers investors exposure to some of the largest gold mining companies in the world, thereby delivering what can be thought of as “indirect” exposure to gold prices. Because the profitability of gold miners depends on the prevailing market price for the goods that they sell, these stocks will generally exhibit a strong correlations to movements in spot gold prices. When gold prices go up, gold miners make more money (and vice versa). It should be noted, however, that this relationship is not perfect; in certain environments, gold miner stocks and physical gold prices can move in opposite directions, and correlation between the two can be less than perfect.