Wednesday, November 30, 2011

best sectors to invest in 2012

best sectors to invest in 2012 : More and more investors are using sector funds for diversification and to strategically give their portfolio a bit of a boost. The best sectors for 2012 depends upon the direction of the world economies and financial markets but there are a few sectors that look better than others.

Where to Invest 2012 - Sectors
The bull market is getting old, the economy hasn't fully recovered from the Great Recession of 2008, the sovereign debt crisis in Europe is not contained, and the chances that world economies and the stock market will bounce back to strength in 2012 are 50% at best.

An aggressive investor could certainly face the fear and uncertainty of the investor herd and take some calculated risks and invest in Europe and Foreign stock funds in 2012 but most of us will want to grow our portfolios while trying to protect against downside risk. With the strategy of balancing risk and reward in mind, consider a few sectors that could do better than others in 2012:

Health sector : No matter what the economy does in 2012 people still need to go to the doctor and buy their drugs (excuse me, pharmaceuticals).

Consumer Staples / Non-Discretionary: There are certain things, such as food and household items that people need to buy for daily living. If the economy suffers in 2012, consumers will cut back on discretionary items (things they don't really need) but they won't cut back on everything. This is how the Consumer Staples and Consumer Non-Discretionary sectors can hold up better than other sectors.

Utilities sector : Even if the economy remains weak, people still need to use their phones, phone lines, gas and electric to live.

Do you get the theme? The sectors that can do well, even if the economy does not, are those that include the basic necessities of life. For this reason, these sectors are often called defensive sectors because they work best as a form of protection--defense doesn't try to score, it tries to protect against loss.

If you'd like to take the contrarian approach and go against the crowd, you might consider venturing into the Real Estate sector or even Financial stocks.

Above all, don't miss my Where to Invest 2012 - Sectors article for the full picture on specific mutual funds, index funds, ETFs and the overall risks and potential benefits of using sector funds in 2012.(source http://mutualfunds.about.com ) For the latest updates on the stock market, visit Stock Market Today

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