Finding a True Alternative to Fulfill Its Role in a Traditional Portfolio, an Alternative Investment Must Improve the Reward for Risk
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The magazine of investing insights for independent-minded advisors June/July 2013 Morningstar Advisor June/July 2 0 1 3 Alternative Investing Aging Population Managed Volatility MorningstarAdvisor.com Finding a True Alternative To fulfill its role in a traditional portfolio, an alternative investment must improve the reward for risk. TAKE A NEW LINE WITH YOUR Sector SPDR ETFs – Top Ten Holdings In Each Sector* EQUITY XLY - Consumer Discretionary XLP - Consumer Staples XLE - Energy Company Name Symbol Weight Company Name Symbol Weight Company Name Symbol Weight 1 Walt Disney DIS 6.78% 1 Procter & Gamble PG 13.24% 1 Exxon Mobil XOM 17.15% Potential benefi ts of adding Sector SPDR ETFs to your portfolio include: 2 Home Depot HD 6.55% 2 Coca-Cola KO 10.24% 2 Chevron CVX 15.43% 3 Comcast CMCSA 6.51% 3 Philip Morris Int’l PM 9.94% 3 Schlumberger SLB 6.57% • Undiluted exposure to a specifi c sector of the S&P 500 4 McDonald’s MCD 6.12% 4 Wal-Mart Stores WMT 8.21% 4 Occidental Petroleum OXY 4.00% • The all-day tradability of stocks 5 Amazon.com AMZN 5.51% 5 CVS Caremark CVS 4.65% 5 ConocoPhillips COP 3.48% 6 News Corp NWSA 3.70% 6 PepsiCo PEP 4.60% 6 Anadarko Petroleum APC 3.15% • The diversifi cation of mutual funds 7 Time Warner TWX 3.34% 7 Altria Group MO 4.19% 7 Halliburton HAL 3.04% • Total transparency 8 Ford Motor F 3.21% 8 Colgate-Palmolive CL 3.43% 8 EOG Resources EOG 2.56% 9 NIKE Inc B NKE 2.76% 9 Mondelez International MDLZ 3.33% 9 Phillips 66 PSX 2.41% • Liquidity 10 Target TGT 2.74% 10 Costco Wholesale COST 3.11% 10 Pioneer Natural Resources PXD 2.34% XLF - Financial XLV - Health Care XLI - Industrial Company Name Symbol Weight Company Name Symbol Weight Company Name Symbol Weight 1 Berkshire Hathaway B BRK.b 8.48% 1 Johnson & Johnson JNJ 13.20% 1 General Electric GE 11.78% 2 JP Morgan Chase JPM 8.20% 2 Pfi zer PFE 11.57% 2 United Technologies UTX 5.49% 3 Wells Fargo WFC 8.14% 3 Merck MRK 7.87% 3 Union Pacifi c UNP 5.19% 4 Citigroup C 6.20% 4 Amgen AMGN 4.32% 4 3M MMM 4.68% 5 Bank of America BAC 5.82% 5 Gilead Sciences GILD 4.27% 5 Boeing BA 4.46% 6 American Express AXP 2.87% 6 AbbVie ABBV 4.03% 6 United Parcel Service B UPS 4.29% 7 Goldman Sachs GS 2.79% 7 Bristol-Myers Squibb BMY 3.62% 7 Honeywell Intl HON 4.17% 8 US Bancorp USB 2.71% 8 Unitedhealth Group UNH 3.43% 8 Caterpillar CAT 4.06% 9 American Intl Group AIG 2.67% 9 Lilly Eli LLY 3.06% 9 Emerson Electric EMR 2.91% 10 Simon Property Group SPG 2.44% 10 Biogen Idec BIIB 2.93% 10 Danaher DHR 2.72% XLB - Materials XLK - Technology XLU - Utilities Time For A Company Name Symbol Weight Company Name Symbol Weight Company Name Symbol Weight Stock Alternative 1 Monsanto MON 11.81% 1 Apple AAPL 13.87% 1 Duke Energy DUK 9.44% 2 E. I. du Pont de Nemours DD 10.51% 2 Microsoft MSFT 8.32% 2 Southern SO 8.10% 3 Dow Chemical DOW 8.43% 3 Google Inc GOOG 7.35% 3 Dominion Resources D 6.87% 4 Praxair PX 6.99% 4 Intl Business Machines IBM 7.08% 4 NextEra Energy NEE 6.72% 5 Freeport McMoRan Copper & Gold FCX 5.96% 5 AT&T T 6.86% 5 Exelon EXC 6.20% 6 LyondellBasell Industries LYB 4.76% 6 Verizon Communications VZ 5.17% 6 American Electric Power AEP 4.85% 7 Ecolab ECL 4.64% 7 Oracle ORCL 4.06% 7 PG&E PCG 4.13% 8 PPG Industries PPG 4.40% 8 Cisco Systems CSCO 3.72% 8 PPL PPL 3.77% 9 Intl Paper IP 4.36% 9 QUALCOMM QCOM 3.55% 9 FirstEnergy FE 3.76% Visit www.sectorspdrs.com 10 Air Products & Chemicals APD 3.78% 10 Intel INTC 3.37% 10 Sempra Energy SRE 3.64% or call 1-866-SECTOR-ETF * Components and weightings as of 4/30/13. Please see website for daily updates. Holdings subject to change. An investor should consider investment objectives, risks, charges and expenses carefully before investing. To obtain a prospectus, which brokerage commissions apply. ETFs are considered transparent because their portfolio holdings are disclosed daily. Liquidity is characterized by a high level contains this and other information, call 1-866-SECTOR-ETF or visit www.sectorspdrs.com. Read the prospectus carefully before investing. of trading activity. The S&P 500, SPDRs, and Select Sector SPDRs are trademarks of The McGraw-Hill Companies, Inc. and have been licensed for use. The stocks included Select Sector SPDRs are subject to risks similar to those of stocks, including those regarding short-selling and margin account maintenance. All ETFs are in each Select Sector Index were selected by the compilation agent. Their composition and weighting can be expected to differ to that in any similar indexes subject to risk, including possible loss of principal. Funds focusing on a single sector generally experience greater volatility. Diversifi cation does not eliminate that are published by S&P. The S&P 500 Index is an unmanaged index of 500 common stocks that is generally considered representative of the U.S. stock the risk of experiencing investment losses. market. The index is heavily weighted toward stocks with large market capitalizations and represents approximately two-thirds of the total market value of all domestic common stocks. Investors cannot invest directly in an index. The S&P 500 Index fi gures do not refl ect any fees, expenses or taxes. Ordinary ALPS Distributors, Inc. a registered broker-dealer, is distributor for the Select Sector SPDR Trust. TAKE A NEW LINE WITH YOUR Sector SPDR ETFs – Top Ten Holdings In Each Sector* EQUITY XLY - Consumer Discretionary XLP - Consumer Staples XLE - Energy Company Name Symbol Weight Company Name Symbol Weight Company Name Symbol Weight 1 Walt Disney DIS 6.78% 1 Procter & Gamble PG 13.24% 1 Exxon Mobil XOM 17.15% Potential benefi ts of adding Sector SPDR ETFs to your portfolio include: 2 Home Depot HD 6.55% 2 Coca-Cola KO 10.24% 2 Chevron CVX 15.43% 3 Comcast CMCSA 6.51% 3 Philip Morris Int’l PM 9.94% 3 Schlumberger SLB 6.57% • Undiluted exposure to a specifi c sector of the S&P 500 4 McDonald’s MCD 6.12% 4 Wal-Mart Stores WMT 8.21% 4 Occidental Petroleum OXY 4.00% • The all-day tradability of stocks 5 Amazon.com AMZN 5.51% 5 CVS Caremark CVS 4.65% 5 ConocoPhillips COP 3.48% 6 News Corp NWSA 3.70% 6 PepsiCo PEP 4.60% 6 Anadarko Petroleum APC 3.15% • The diversifi cation of mutual funds 7 Time Warner TWX 3.34% 7 Altria Group MO 4.19% 7 Halliburton HAL 3.04% • Total transparency 8 Ford Motor F 3.21% 8 Colgate-Palmolive CL 3.43% 8 EOG Resources EOG 2.56% 9 NIKE Inc B NKE 2.76% 9 Mondelez International MDLZ 3.33% 9 Phillips 66 PSX 2.41% • Liquidity 10 Target TGT 2.74% 10 Costco Wholesale COST 3.11% 10 Pioneer Natural Resources PXD 2.34% XLF - Financial XLV - Health Care XLI - Industrial Company Name Symbol Weight Company Name Symbol Weight Company Name Symbol Weight 1 Berkshire Hathaway B BRK.b 8.48% 1 Johnson & Johnson JNJ 13.20% 1 General Electric GE 11.78% 2 JP Morgan Chase JPM 8.20% 2 Pfi zer PFE 11.57% 2 United Technologies UTX 5.49% 3 Wells Fargo WFC 8.14% 3 Merck MRK 7.87% 3 Union Pacifi c UNP 5.19% 4 Citigroup C 6.20% 4 Amgen AMGN 4.32% 4 3M MMM 4.68% 5 Bank of America BAC 5.82% 5 Gilead Sciences GILD 4.27% 5 Boeing BA 4.46% 6 American Express AXP 2.87% 6 AbbVie ABBV 4.03% 6 United Parcel Service B UPS 4.29% 7 Goldman Sachs GS 2.79% 7 Bristol-Myers Squibb BMY 3.62% 7 Honeywell Intl HON 4.17% 8 US Bancorp USB 2.71% 8 Unitedhealth Group UNH 3.43% 8 Caterpillar CAT 4.06% 9 American Intl Group AIG 2.67% 9 Lilly Eli LLY 3.06% 9 Emerson Electric EMR 2.91% 10 Simon Property Group SPG 2.44% 10 Biogen Idec BIIB 2.93% 10 Danaher DHR 2.72% XLB - Materials XLK - Technology XLU - Utilities Time For A Company Name Symbol Weight Company Name Symbol Weight Company Name Symbol Weight Stock Alternative 1 Monsanto MON 11.81% 1 Apple AAPL 13.87% 1 Duke Energy DUK 9.44% 2 E. I. du Pont de Nemours DD 10.51% 2 Microsoft MSFT 8.32% 2 Southern SO 8.10% 3 Dow Chemical DOW 8.43% 3 Google Inc GOOG 7.35% 3 Dominion Resources D 6.87% 4 Praxair PX 6.99% 4 Intl Business Machines IBM 7.08% 4 NextEra Energy NEE 6.72% 5 Freeport McMoRan Copper & Gold FCX 5.96% 5 AT&T T 6.86% 5 Exelon EXC 6.20% 6 LyondellBasell Industries LYB 4.76% 6 Verizon Communications VZ 5.17% 6 American Electric Power AEP 4.85% 7 Ecolab ECL 4.64% 7 Oracle ORCL 4.06% 7 PG&E PCG 4.13% 8 PPG Industries PPG 4.40% 8 Cisco Systems CSCO 3.72% 8 PPL PPL 3.77% 9 Intl Paper IP 4.36% 9 QUALCOMM QCOM 3.55% 9 FirstEnergy FE 3.76% Visit www.sectorspdrs.com 10 Air Products & Chemicals APD 3.78% 10 Intel INTC 3.37% 10 Sempra Energy SRE 3.64% or call 1-866-SECTOR-ETF * Components and weightings as of 4/30/13.