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By Jeremy Glaser | 12-03-2009 06:08 AM

Burns' Best ETF Ideas for 2010

Scott Burns places his bets on the best funds for next year, as well as some tips on what to avoid.

Jeremy Glaser: I'm Jeremy Glaser with Morningstar.com. It's Ideas Week, and here to discuss the best and worst picks for ETFs is director of ETF Analysis, Scott Burns. Scott, thanks for joining me.

Scott Burns: Thanks for having me, Jeremy.

Glaser: So investors who are looking to make an ETF play in 2010, what do you think some of their best ideas would be?

Burns: Well, we've got a couple themes for you here. The first is something we've actually talked about a few times, both in print and in video on Morningstar.com, and that's medical devices. We've seen some appreciation in the iShares US Medical Devices Index, and that ticker is IHI. But actually we think that's just confirmation on our thesis.

We think there's still a lot of room to run, and even with all the controversy surrounding health care right now, we think the growth prospects in that space, and really the impact that any change coming out of Congress or the president's office will have, will be actually be very minimal on this space. So IHI we think is still prime for a nice start to 2010.

Glaser: So you think that makes more sense than looking at managed health care or big pharma or other places in health care?

Burns: Yeah. The risks in those are multiple, both from a legislative impact, and also actually really from a growth impact. So when you just kind of think about what the big pharma pipelines look like, I do think they're great valuations. But for us when we look at it, our preferred choice right now is medical devices.

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