For those investors who like to add sector funds to their portfolio for diversification, tactical asset allocation reasons, or even for alternative sources of fixed income, there are 4 strong choices to choose from for 2013.
My criteria in selecting these sectors, which you can see in my article, Best and Worst Sectors in 2013, was to find areas that can perform well relative to other sectors in the latter stages of a bull market or early stages of a bear market. I also wanted to choose a few that are known for producing income because finding good sources of fixed income in 2013 will be a challenge.
Best Sectors for 2013
Utilities is a defensive sector because it tends to perform better than most other sectors when there is negative pressure on stocks. It is also one of the best sectors for dividend income.
Health is another defensive sector that can do well when other sectors are struggling. Health is a standout in 2012 and can do well (despite Obamacare) in 2013.
Consumer Non-Cyclicals is another defensive area because, like Utilities and Health, consumers still need to buy the necessities even in challenging times.
Real Estate is among the highest dividend-paying sectors but is also an outside shot to be a good growth area in 2013. Housing is already starting to bounce off multi-year lows and may be the greatest benefactor in what I believe to be the last leg of this current bull market over the next 12 to 18 months.
For more reasoning and some good mutual fund and ETF ideas, you can check my full length article, Best and Worst Sectors in 2013.