Forget leather gloves or perfume, buy an ETF

The holidays are here and there’s no doubt that you have somebody to buy for that seems to have everything or doesn’t want anything. Cash may seem a little too impersonal and you know that if you try to purchase something, it will probably be money wasted. For decades, enterprising gift givers have used their knowledge of the investment markets to give a gift that keeps giving for many years.

You have probably heard that bonds are safer than stocks and, although that’s the subject of debate, the consistent dividend (called a coupon in bond terms) makes a bond a fine choice for long-term investors. There is a large amount of bond ETFs spanning all sectors of the bond world. Consider bond ETFs like iShares iBoxx $ Invest Grade (LQD), iShares Barclays TIPS Bond (TIP ) and BlackRock Corporate High Yield Fund (HYT ). Not all bond funds are technically ETFs, but they trade in the equities markets just like traditional ETFs.

Sector ETFs

If you want to be a little more personal, consider an ETF in the industry where the person works. If they work in health care, try PowerShares Dyanmic Healthcare (PTH ) or SPDR S&P Pharmaceuticals (XPH ). If the gift is for a child, what do they want to be when they grow up? If they want to be a pilot, consider Guggenheim Airline (FAA ) or Direxion Airline (FLYX). If they work in retail, SPDR S&P Retail (XRT ) or Retail HOLDRs (RTH ) are worth your research time.

Metal ETFs

If the person you’re buying for has an eye for jewelry, consider a precious metals ETF. For a pure play on gold, SPDR Gold Shares (GLD ) is the ETF of choice. For an ETF that tracks the performance of a wider range of precious metals like silver and palladium. PowerShares DB Precious Metals (DBP ) is worth a look.

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In order to gift a stock or ETF purchase, you will have to transfer the purchased shares to the person receiving the gift. Your broker can help you with that.

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