Dion Money Management Blog   Money Management for Retirees and Their Families

Here is my list of this week’s ETF winners and losers.

iPath Dow Jones UBS Sugar Subindex Total Return ETN (SGG) 7.3%

Investors who have been monitoring SGG’s performance over the past few months are learning first hand of the roller-coaster nature of single commodity-tracking ETNs.

Since the opening days of May, the fund has taken a steep, largely interrupted upward trajectory. That action is markedly different from the fund’s performance in April, when shares of SGG fell on all but five trading days.

The agriculture industry is attractive. However, given this type of wildly volatility, I urge conservative-minded investors to look elsewhere for exposure. Options such as PowerShares DB Agriculture ETF (DBA) and Market Vectors Agribusiness ETF (MOO) will behave more reliably over longer time frames.
ETFS Physical Palladium Shares (PALL) 3.7%

Since bouncing off levels near 2011 lows in mid-May, the physically-backed palladium ETF has been on a steady upward path. This week’s strength has helped to push the fund back toward early March levels.

This strength is interesting considering the broad market’s shaky action over the past few weeks. Palladium is used extensively in the production of catalytic converters and, therefore, tends to trade in line with the marketplace. This fund may prove to be interesting to watch in the days ahead.

Market Vectors Russia ETF (RSX) 2.4%

Crude prices were closely watched following this week’s OPEC meeting. In response to the group’s inability to agree on output, oil prices headed higher.

The upward action that took place in the energy markets boded well for RSX, and pushed the fund to industry-leading gains. Oil and gas players including Gazprom and Lukoil make up the largest slice of this fund’s index.

Guggenheim Solar Energy ETF (TAN) -7.4%

Weak market action combined with ongoing concerns about Europe’s looming debt issues helped to create ample headwinds for the volatile solar energy sector.

This week’s losses have helped push TAN further along the downward path it has been traveling since the start of May. The retreat has been dramatic. The fund is currently trading at levels last seen in July 2010.

iShares Dow Jones U.S. Home Construction Index Fund (ITB) -5.9%

ITB’s dismal action over the past week once again reminds investors of the ample headwinds facing the residential real estate industry.

The coming week’s economic calendar is laden with real estate-related data points. Although I urge long-term investors to steer clear of ITB and SPDR S&P Homebuilder ETF (XHB) , these reports will likely prove interesting.

iShares MSCI Thailand Investable Market Index Fund (THD) -4.8%

Thailand’s market has run into substantial headwinds over the past month as market jitters send investors fleeing from volatile members of the emerging world.

THD will likely be in store for continued shakiness in the coming weeks as investors look to the national elections that are scheduled for July 3.

Disclaimer

Welcome to Don Dion’s Daily ETF Winners and Losers. Be sure to stop by each day to get a feel of who’s winning and who’s losing when it comes to ETFs.

Winners

iPath Dow Jones UBS Natural Gas Subindex Total Return ETN (GAZ) 2.9%
Natural gas prices are trekking higher, helping the futures-based GAZ and United States Natural Gas Fund (UNG) close out the week on a strong note.

Equity-based ETFs designed to tap into the energy sector are getting a lift as well. The Global X Uranium ETF (URA) and Market Vectors Coal ETF (KOL) are also listed among the day’s notable gainers.

SPDR S&P Russia ETF (RBL) 2.7%
Outside of the United States, a number of international ETFs are benefiting from the energy lift as we head towards the close of the week. Russia and Norway are two notable climbers.

Investors can gain heavy exposure to these two nations through funds such as RBL and Global X Norway ETF (NORW) respectively.

First Trust ISE Global Copper Index Fund (CU) 2.0%
Commodities strength is extending beyond the energy industry. Metals-producers such as those underlying the CU are witnessing positive action as well.

Precious metals miners are gaining ground as well, with Global X Silver Miners ETF (SIL) and Market Vectors Junior Gold Miners ETF (GDXJ) jumping.

iShares Dow Jones U.S. Home Construction Index Fund (ITB) (ITB) 1.5%
The homebuilders are seeing strength, pushing ITB to its third day of gains. With Friday’s upward action the fund has managed to pierce through its 50-day moving average for the first time since the start of the month.

The residential real estate industry remains an area of concern. Investors should use extreme caution here.

Losers

iShares MSCI Turkey Investable Market Index Fund (TUR) -2.6%

Although it witnessed a bounce during the opening half the week, the past few days have been painful for the Turkey ETF. With Friday’s losses, the fund has retreated back to levels last seen during mid-March.

May was a tough month in general for TUR. Since hitting 2011 during the opening days, it has been on a steep decline, breaking below its 50- and 200-day moving averages.

iPath S&P 500 VIX Short Term Futures ETN (VXX) -1.8%
The markets are witnessing gains on Friday, closing out a choppy week on a positive note. In response to this upward action, the VIX-tracking VXX is stumbling.

VXX has lost ground for four consecutive days, pushing it new all-time lows.

Disclaimer

Although they tend not to generate the same wild fanfare as their gold and silver counterparts, the platinum group of metals could be in store for gains as we prepare to head into the second half of 2011.

Investors can gain direct access to these industrious metals through physically-based ETFs including the ETFS Physical Platinum Shares (PPLT) and ETFS Physical Palladium Shares (PALL) .

Alternatively, both platinum and palladium can also be found underlying physically-backed precious metal basket funds such as ETFS Physical Precious Metal Basket Shares (GLTR) and ETFS Physical White Metal Shares (WITE) .

So far, this year has been difficult for this class of precious metals; as silver and gold have generated headlines and flirted near record highs, platinum and palladium have largely flown under the radar. Year to date, both PALL and PPLT have lagged other precious metal options.

PALL, the worst performer among the bullion-backed precious metal ETFs, has had a particularly rough ride. Despite the market’s gains and ongoing investor interest in precious metals, the fund has remained locked in negative territory over the first five months of the year.

Although their performance in recent months has been lukewarm, these two precious metal players may see a lift in the near term.

That’s because the state of the auto industry has and will continue to play a major role in directing the performance of these two metals. Both platinum and palladium are used extensively in the production of catalytic converters. Therefore, I have often urged investors with exposure to these metals to keep a close eye on the ongoing global automotive sector recovery.

The production resurgence from Toyota and other Japanese car players should provide both palladium and platinum with a welcomed boost.

While the prospects for platinum and palladium will improve as car companies continue along the road to recovery, the supply picture appears to point to strength as well. As

The combination of an improving global automobile industry and supply shortages is painting an optimistic picture for palladium and platinum as we move ahead, and funds like PALL and PPLT may prove attractive in the coming weeks and months. However, it is important to note that these two components of the precious metals industry tends to behave a volatile manner.

Therefore, while it may be tempting to dive headfirst into either of these funds, both are best approached conservatively. By using PALL or PPLT in combination with a gold-based product like iShares Gold Trust (IAU) , investors can construct a well-diversified precious metal portfolio.

Disclaimer

The temperature is heating up here in the Berkshires and for many here and across the U.S., this means a time to escape the day to day office life and enjoy some welcomed rest and relaxation.

While many are counting down to the time when they can replace their desk chairs with beach chairs, for others, the introduction of the summer months can present a number of attractive investing opportunities.

Within the ETF universe there are a number of products that may prove exciting to watch over the next few months.

PowerShares Dynamic Leisure & Entertainment Portfolio (PEJ)
Investors can profit as friends and family escape the workplace for the fun in the sun. PEJ is a unique, consumer-focused ETF product designed specifically to track the companies responsible for providing individuals with the food, fun, and entertainment that define summer vacation.

The fund’s top holdings include Starbucks (SBUX) , Las Vegas Sands (LVS) , Carnival (CCL) , and Disney (DIS) . Despite its niche focus, PEJ’s index is relatively well-diversified. The fund’s 10 largest positions account for less than half of its index.

iShares Gold Trust (IAU)
As we have seen so far this year, it is difficult to predict when and where the next bout of market turmoil will originate. Given this uncertainty, investors will want to make sure that they maintain a level of defense when it comes to navigating the market the next few months. Gold, bonds, and dividend-paying equities will come in handy when it comes to weathering turmoil.

Another precious metal ETF to keep an eye on will likely be the iShares Silver Trust (SLV) . This shiny, industrious metal has run into headwinds since falling from near record highs. In the near future, it will be interesting to see if volatility persists.

iShares MSCI EMU Index Fund (EZU)
The first half of 2011 has been inundated with concerning international stories and events including the bloody political turmoil in the Middle East, and the devastating Pacific earthquake.

Meanwhile, in Europe, ongoing sovereign debt issues have continued to generate headlines and raise investor ire. As vulnerable nations including Spain, Ireland, and Greece work to battle economic headwinds, this region will likely be one to keep an eye on. Risk tolerant investors looking to track the developments in this corner of the developed world will want to keep EZU on the radar.

EZU boasts heavy exposure to troubled nations such as Spain, Italy, and Portugal. However, with Germany and France headlining the geographic breakdown, the fund may be able to offset some of the region’s volatility.

iShares Dow Jones Transportation Average Index Fund (IYT)
Rising energy prices have been on the minds of many as they prepare for the summer travel season. Interestingly, however, oil’s ascension has had only limited effect on the companies underlying the Dow Jones Transportation Index so far.

Over the most recent three month period, IYT has managed to outpace the broader SPDR Dow Jones Industrial Average ETF (DIA) by a comfortable margin.

Although the impact has been limited so far, it will be interesting to see if energy prices will affect the plane, train, and delivery industry as summer presses on. IYT’s performance may also provide investors with insight into the state of the consumer. Companies like Delta (DAL) , FedEx (FDX) and Union Pacific (UNP) will benefit as individuals take to the rails, sea, and sky.

First Trust Dow Jones Internet Index Fund (FDN)
The Internet industry will be on investors’ minds over the next few months as they attempt to profit from the hot social media industry. Following the successful IPOs of LinkedIn (LNKD) and Yandex (YNDX) , many have begun to question whether we are in the midst of a new Internet bubble. This debate will continue to rage in the months ahead as the markets seek to uncover clues regarding the futures of Zynga, Twitter, and Facebook.

FDN is an attractive, well-diversified product for investors looking to access the Internet’s popularity. Rather than exposing investors to volatile, newly IPOed firms like LinkedIn, this fund combines exposure to weathered online veterans including Google (GOOG) and Amazon (AMZN) .

Disclaimer

Here are five ETFs to watch this week.

iShares MSCI EMU Index Fund (EZU)
Europe took center stage last week as investors were once again reminded of the debt crises facing vulnerable euro members. During this week, it will be interesting to see if these issues remain on the forefront of investors’ minds.

I continue to urge investors to avoid products with heavy exposure to nations like Spain, Italy, Greece and Ireland. Rather, risk-tolerant investors seeking exposure to this corner of the developed world may find nations outside of the euro bloc attractive. Over the most recent 30-day period, funds like the iShares MSCI Sweden Index Fund (EWD) and iShares MSCI Switzerland Index Fund (EWL) have managed to outpace EZU.

Market Vectors Vietnam ETF (VNM)
Inflation concerns have wreaked havoc on the Vietnam’s market, leading the VNM to suffer a heavy bout of losses. Throughout the latter half of May, the fund witnessed a steep sharp sell-off, ultimately resulting in new all-time lows.

VNM’s steep decline over the past few weeks can be viewed as a reminder of the volatility inherent in emerging and frontier markets. Although nations like Vietnam can witness strong upside action during times of market euphoria, it is crucial to keep exposure to these countries small and focused. This way, investors can protect against weakness.

First Trust NASDAQ Global Auto ETF (CARZ)
In its opening weeks of trading, First Trust’s automotive ETF has struggled to gather much of a following. During this shortened week, however, CARZ may be a product to keep an eye on.

Auto and truck sales numbers are slated to be released this Wednesday. Whereas in the past I have often pointed investors to products such as SPDR S&P Retail ETF (XRT) or the iShares Dow Jones U.S. Consumer Goods Index Fund (IYK) in order to track the car industry, with the introduction of CARZ, investors can now gain direct access to the top car makers from around the globe.

Ultimately, CARZ should be watched from the sidelines. The fund’s paltry average trading volume makes it vulnerable to liquidity issues.

Utilities Select Sector SPDR (XLU)
XLP and other ETFs designed to track defensive market sectors may prove to be popular destinations for conservative investors as we kick off June.

May was a strong month for consumer staples, utilities, and the health care sector. As wide-reaching global economic concerns weighed heavily on the broad market indices, the Consumer Staples Select Sector SPDR (XLP) , XLU, and Healthcare Select Sector SPDR (XLV) managed to outperform.

Looking to the near future, many of the same issues that plagued the global markets in May look set to continue. Devising a strong plan for defense will be essential to successful market navigation.

PowerShares Dynamic Leisure & Entertainment Portfolio (PEJ)

The summer vacation season is gearing up and as consumers prepare to escape their offices for a little rest and relaxation, investors may want to keep the PEJ and other consumer-focused funds on the radar.

Despite concerns regarding the detrimental effects of rising commodity costs, the consumer has proven to be a resilient corner of the market during the first half of 2011. It will be interesting to see if this strength holds up during the coming months.

Disclaimer

As he has quipped in the past, Warren Buffett’s favorite holding period for any investment is “forever.” By sticking to a long-term time horizon when structuring his legendary investing portfolio, the famed investor has been able to weather the numerous short term shake-ups during his multi-decade career.

In examining his current holdings lineup, it is possible to uncover clues that will help retail investors mimic this financial titan and profit over the long run.

Buffett’s portfolio taps into a wide range of market sectors, providing the investor with exposure to industries ranging from energy to health care. The largest chunks of the Berkshire Hathaway (BRK.A) portfolio, however, are dedicated to companies in the financial sector and consumer sector. These two components help to exemplify one of the major strengths of Buffett’s portfolio.

Heavy exposure to financial goliaths like Wells Fargo (WFC) , American Express (AXP) and US Bancorp (USB) places the Berkshire Hathaway portfolio in a strong position to benefit during times of market euphoria. Financials and other cyclical sectors of the marketplace perform best at times when nations are enjoying broad economic growth and expansion.

At the same time, Buffett’s portfolio is also well suited to profit during times of uncertainty. As we have witnessed in recent weeks during shaky market periods, strength tend to gravitate towards more durable corners of the marketplace. Consumer staples are often a notable beneficiary in scenarios such as this.

The Berkshire Hathaway portfolio is laden with companies that will exhibit stability even in the face of market shakeups. Companies like Coca-Cola (KO) , Procter & Gamble (PG) and Kraft Foods (KFT) are a few of Buffett’s largest defensive positions.

Aside from their endurance during times of market uncertainty however, these holdings also offer attractive dividends that will further aid the Nebraska native as the markets work through economic storms down the road.

By simultaneously playing both offense and defense, Warren Buffett has prepared the Berkshire Hathaway portfolio to perform well in any and all market environments. Using ETFs, it is possible for investors to mimic the duality inherent of Oracle of Omaha’s investing strategy.

While it can be tempting to dive head first into the hottest companies and most rapidly-growing nations, I have often insisted that even the most aggressive investors maintain long-term exposure to defensive asset classes like bonds, gold, and dividend-paying equities. While, during times of strength, fast-moving, headline grabbing names may provide plenty of upside, during times of market weakness, investors will be able to depend on ETFs like the iShares Gold Trust (IAU) and the iShares Dow Jones Select Dividend Index Fund (DVY) for some welcomed comfort.

Navigating this slow and often arduous market recovery has taken patience, a watchful eye, and a strong stomach. While I believe that we are on the healing path, I am also confident that hurdles will lie ahead. By following Buffett’s lead and dividing exposure across a combination of offensive and defensive positions, it is possible to overcome these challenges and prepare for long- term strength.

Disclaimer

Welcome to Don Dion’s Daily ETF Winners and Losers. Be sure to stop by each day to get a feel of who’s winning and who’s losing when it comes to ETFs.

Winners

Market Vectors Vietnam ETF (VNM) 4.0%
Vietnam’s marketplace is scoring gains, pushing VNM to industry-leading strength and breaking the fund’s eight-day string of losses.

This frontier nation ETF’s descent has been sharp and steep. Looking to the days ahead, it will be interesting to see if it can recover some ground.

Other Asia-related ETFs are trudging higher as well. The iShares MSCI South Korea Index Fund (EWY) is up 1.7%.

SDPR S&P Retail ETF (XRT) 1.6%
A strong earnings showing from Tiffany & Co (TIF) providing XRT with fuel needed to push higher.

XRT’s upward action throughout the start of 2011 has been particularly impressive considering the looming concerns over rising commodity costs. I often turn to this fund as a strong option for investors looking to gain firsthand exposure to the consumer recovery.

iPath Dow Jones UBS Grains Subindex Total Return ETN (JJG) 1.2%
The agriculture sector is witnessing mixed action. As grains-backed funds like JJG and Teucrium Corn ETF (CORN) tread higher, the iPath Dow Jones UBS Cotton Subindex Total Return ETN (BAL) is taking one of the ETF industry’s biggest hits.

Despite this bipolarity, the PowerShares DB Agriculture Fund (DBA) is managing to carve out gains.

Losers

United States Natural Gas Fund (UNG) -1.8%
Natural gas prices are stumbling after the Energy Information Administration reported that fuel stockpiles grew by more than was expected.

Once again, the equity-based First Trust ISE Revere Natural Gas Index Fund (FCG) is proving to be a more stable option than futures-backed products like UNG. On Thursday, shares of FCG were up 0.4%.

iShares Silver Trust (SLV) -1.5%
The physically-based silver ETF is struggling against its 50-day moving average, snapping a three-day streak of gains.

The downward action witnessed from silver is weighing on the broad ETFS Physical Precious Metals Basket Shares (GLTR) . This fund, designed to track a combination of silver, gold, platinum and palladium is stuck in a downturn as well.

Guggenheim Solar ETF (TAN) -1.0%
The solar energy industry is taking a hit, leading TAN lower. This ETF has suffered losses on nine out of the past ten trading days. As a result of this tumble, the fund has retreated to new 2011 lows.

Given their inherently volatile nature, investors should approach TAN and any other alternative energy ETF with caution.

Disclaimer

The investing environment has been shaken by the bloody political protests in the Middle East and Northern Africa, Japan’s natural disasters, the commodities shakeup and most recently, the resurgence of the European debt crisis.

Although this rocky situation from these headwinds may prove too much to many, I advise against fleeing this marketplace at this time.

Rather, by making adjustments, it is possible for battered investors to weather current economic storms and prepare for clearer skies ahead.

In the face of these global challenges, I remain confident in the market’s recovery over the long run. However, as we work through this current bout of turbulence it may be in investors’ best interests to arm themselves with exposure to large, defensive industry goliaths such as General Electric (GE) , International Business Machines (IBM) , Chevron (CVX) and McDonalds (MCD) .

These companies tend to lack the same pop as small-, and mid-cap firms, and are often viewed as boring. However, their size, global reach, and liquidity will likely make them better suited for maintaining stability during periods of questionable market action.

Funds such as the SPDR Dow Jones Industrial Average ETF (DIA) will provide investors with exposure to wide collection of these companies.

Though on a long-term time scale, they continue to lag against small- and mid-cap equity indices by a comfortable margin, large-cap indices such as the Dow Jones Industrial Average have made big strides in recent weeks. In fact, over the most recent 90-day period, the DIA has actually managed to outpace products including the iShares Russell 2000 Index Fund (IWM) and the iShares S&P MidCap 400 Index Fund (MDY) .

In the coming weeks, it will be interesting to see if this gap further contracts as investors continue to seek out the protection of business heavyweights.

Large-cap ETFs like DIA may present as an appealing opportunity for some. However, another option investors may want to consider is a dividend-focused investing strategy.

Throughout the opening half of the year, we have watched as a number of well-known firms raise their dividends to draw down their massive cash reserves. Most recently, UnitedHealthGroup (UNH) announced a 30% dividend hike.

Consistent yields such as those offered by UNH will provide a welcomed sense of comfort during any type of market environment. While it is possible for investors to scour the marketplace looking for top dividend-paying companies, the ETF industry has done most of the work for us. By utilizing a product like iShares Dow Jones Select Dividend Index Fund (DVY) , it is possible to take on exposure to a basket of companies that have offered consistently high dividends over time.

Top DVY holdings include Lorillard (LO) , Chevron (CVX) and Entergy (ETR) . The fund’s yield currently stands at over 3%.

Investors have been greeted with an exhausting list of headwinds during the opening half of 2011 and as we continue ahead, many of these same factors will continue to dominate headlines. At times, the looming turmoil will appear too daunting, but I urge investors to avoid exiting the market entirely.

Rather, by homing in on ETFs aimed at large caps and dividend-paying equities, it is possible to build a strong defense that will protect against shakeups down the road.

Disclaimer

The Internet realm has been thrust into the spotlight following last week’s LinkedIn (LNKD)’s trading debut. While exciting to watch, investing in this industry could prove tricky in the weeks ahead.

Despite the rampant investor interest, clearly much remains unknown about firms like LNKD and Russia’s Yandex , which will take the stock symbol YNDX when it begins trading. Until the dust settles, it will be difficult to judge how they will perform. Already, in the aftermath following the LinkedIn’s explosive action late last week, many analysts and commentators have already begun to clamor over whether or not we are witnessing signs of a new dot-com bubble.

Given the swirling uncertainty, I caution against diving into any of these newly IPOed companies at this time. This does not mean, however, that investors should shun this corner of the tech sector entirely. On the contrary, ETFs with heavy focus on online firms may be well-positioned to benefit in the near term as interest in the Internet reaches a boiling point.

I have often pointed out the First Trust Dow Jones Internet Index Fund (FDN) as a strong option for investors looking for a unique way to target the technology sector over the long run. However, in the nearer term, this fund could also prove to be a safe way to profit as companies like LinkedIn stay on the forefront of investors’ minds.

Since it launched in 2006, FDN has been dedicated to providing investors with exposure to the most attractive companies in the Internet. Today, the fund’s index includes heavy exposure to large, online goliaths like Google (GOOG) , Amazon (AMZN) and eBay (EBAY) . While these companies comprise the largest slices of the fund’s portfolio FDN also sets aside a substantial portion of its assets for smaller players including Netflix (NFLX) and salesforce.com (CRM) .

Whereas companies like LinkedIn and Yandex will likely prove volatile in the near term as they work to solidify their places in the broader markets, the firms underlying FDN have already developed a substantial, dedicated following.

According to FDN’s website, companies considered for the Dow Jones Internet Index must have had at least three months of trading history. Additionally, during this period, the company must have an average capitalization of $100 million; an average closing price over $10; and adequate liquidity.

By requiring that these criteria be met prior to their inclusion into the index, FDN can better ensure that the companies comprising its portfolio will behave in a stable, reliable manner over time.

LinkedIn’s IPO has sparked heavy investor interest in the Internet industry and, looking forward, it will be exhilarating to see how it and fellow newcomers will perform. Given the wild excitement in this corner of the marketplace however, finding strong, stable ways to gain exposure over the short and mid-term may prove difficult.

With no exposure to LinkedIn or Yandex, FDN will not be directly influenced by the day-to- day performance of these hotly watched names. Rather, with exposure to weathered Internet veterans like Google and eBay, this fund will be best utilized by conservative investors looking to take advantage as general interest towards this region of the tech sector stays buoyed.

Disclaimer

Over the course of the week, investors and market commentators have been mulling over the 13F regulatory filings released by individuals including George Soros, Steve Cohen, John Paulson, and Warren Buffett.

These documents typically have provided plenty of interesting clues and insights into the current mindsets of these Wall Street notables.

According to the filing, Buffett made only minor adjustments to his legendary investment portfolio during the opening quarter of 2011. The most noticeable change was the addition of Mastercard (MA) . As of the end of March, Buffett’s stake in the credit card company totaled 216,000 shares. Aside from this new position, the investor also trimmed his stake in ConocoPhillips (COP) .

This is not the first time that Buffett has tapped into the credit card industry. On the contrary, American Express (AXP) is a long-standing Berkshire Hathaway (BRK.A) holding and is currently his third largest position, accounting for a more than 10% stake of the portfolio.

As noted by many, the decision to gain exposure to Mastercard is not surprising. Rather, the move can likely be traced back to Buffett’s newest hire, Todd Combs, a former hedge fund manager-turned-potential Buffett successor. Prior to joining Berkshire Hathaway, Comb’s hedge fund, Castle Point, held a large stake in the credit card company as well.

Buffett’s attraction to credit card companies like Mastercard and American Express can be viewed another play on the strength of the U.S. consumer. Throughout the slow and often arduous economic recovery, he has consistently maintained a bullish outlook for the United States.

Although financials represent the largest slice of Buffett’s portfolio’s sector breakdown, the Oracle of Omaha also boasts heavy exposure to companies that will be influenced by the consumer’s resurgence. Top portfolio components include Coca-Cola (KO) , Procter & Gamble (PG) , Kraft Foods (KFT) and WalMart (WMT) .

Like Coca-Cola and WalMart, the long-term strength of Mastercard and American Express will heavily depend on the consumer’s recovery. As individuals regain confidence, they will become increasingly willing to use credit cards in order to make big ticket purchases.

As noted by Bloomberg following news of Buffett’s actions, the consumer has already started off 2011 on a postive note. According to the quarterly report issued by the U.S. Commerce Department, retail sales during the first three months of 2011 jumped nearly 3%.

There are a few ways that ETF investors can mimic Buffett’s first-quarter investing decisions. Currently, the iShares Dow Jones U.S. Financial Services Index Fund (IYG) is likely the best bet for those looking to tap into the credit card industry.

Together, Mastercard, American Express, and Visa (V) account for less than 10% of the fund’s index. The fund also provides exposure to a number of other financial institutions Buffett has previously expressed interest in. Wells Fargo (WFC) , Bank of New York Mellon (BK) and M&T Bank (MTB) can be found listed among the fund’s holdings.

While IYG may prove attractive for those looking to gain direct access to Buffett’s credit card plays, fans of the investor can also follow his recent actions by homing in on the broader consumer.

In the past, I’ve highlighted funds such as SPDR S&P Retail ETF (XRT) and the iShares Dow Jones Consumer Goods Index Fund (IYK) as strong options designed to target this market sector.

Of these two products, IYK stands out as likely the best choice for investors looking to follow the Nebraska native. P&G, Coca-Cola, and Kraft can be found listed among the fund’s top ten holdings and together represent over a quarter of its portfolio.

Although Buffett made only a few tweaks to his portfolio during the first quarter of 2011, the moves were attention-grabbing. Looking ahead, it will be interesting to see what is more in store for this legendary portfolio.

Disclaimer