The Street – What a year! Going into 2013, no one expected the broader market averages to hit all-time highs. With stagnant wage growth, higher taxes and a still-fragile real estate market, how could have anyone have called the 30% returns we received last year? And yet here we are.
With such astonishingly high returns, some investors may be looking to diversify their portfolios for the new year. Occasionally investor portfolios can become unevenly weighted when one position moves drastically to the upside. In this article I want to highlight three exchange traded funds to consider in the first quarter. Look to these funds to add some diversification to your portfolio and perhaps spice up returns.
I have highlighted the gambling industry a few times in the past year. Betting with the house is never a bad option, as returns are fairly predictable. And the best vehicle for diverse exposure to the the gaming space is the Market Vectors Gaming , which holds familiar names like Las Vegas Sands , Wynn Resorts and MGM.
Fears of a Chinese slowdown made waves last year in the casino market. Gambling revenues seem inelastic in the region. But Macau, the world’s new gaming market, has shown little signs of a slowdown. Along with Hong Kong, Macau is one of two special administrative regions of the People’s Republic of China. These semi-autonomous regions have a unique relationship with mainland China, which remains responsible for defense and foreign affairs. Yet Macau maintains its own legal system, police force, monetary system, customs policy and immigration policy.
While one might imagine that Las Vegas Sands, Wynn, and MGM are dependent on Las Vegas gambling, instead the market is focused heavily on their position in Macau. Indeed, double-digit gaming growth in Asia has powered casino growth in recent years. A note by Wells Fargo gaming analyst Cameron McKnight recently estimated that growth next year in Macau gaming will be about 10%. That is down slightly, but strong nonetheless after years of substantial growth.
