How Sandy Affects These 2 ETFs

Focus: ETFs

Doug Fabian Image Doug Fabian Editor, Successful ETF Investing, ETF Trader's Edge, Weekly ETF Report, and ETFU.com

When natural disasters occur like the Sandy superstorm that hit the Northeast coast recently, some sectors can benefit from the rebuilding after the disaster, while other will be hamstrung for quite a while. It pays to know which is which, notes Doug Fabian of Making Money Alert.

It's been a rough go of it for the entire country, and the cleanup and restoration of the damage from Sandy is just beginning. One ETF that could ride the post-storm reconstruction wave of Hurricane Sandy is the iShares Dow Jones US Home Construction Index Fund (ITB).

Companies included in the fund should be among those to benefit the most from the post-storm construction efforts. In fact, homebuilders and home renovation big-box stores could benefit from the need to rebuild homes, office and apartment buildings, and in some cases, entire neighborhoods.

Not only does ITB feature the nation's biggest publicly traded homebuilding companies, it also includes Home Depot (HD) and Lowe's (LOW).

The fund's Top Ten holdings feature an array of well-known companies: Lennar, Pulte Group, DR Horton, Toll Brothers, NVR, Home Depot, Ryland Group, MDC Holdings, Lowe's, and KB Home.

The ETF has been on the rise this year. With the latest disaster, I expect the fund to climb further in the weeks and months ahead, as re-construction and renovation spending boost revenues and profits at the companies that ITB's performance is designed to track.

The devastating loss of life and property caused by Hurricane Sandy will also be accompanied by billions of dollars in claims that insurers will need to pay.