BlackRock’s Koesterich Recommends Telephone, Energy Companies

Investors should buy a “broad basket” of telecommunication and energy shares to protect gains as marketwide swings make it harder to pick stocks, according to Blackrock Inc.’s Russ Koesterich.

Telecommunication shares are a defensive sector that is “fairly cheap” offering a “good entry point,” while energy companies offer a “good hedge” against potential inflationary pressure in the long-term, said Koesterich, the global chief investment officer for BlackRock’s iShares unit, the world’s biggest provider of exchange-traded funds.

“Markets are volatile and you’ve got a lot of people out there trying to find the best stock,” Koesterich said on Bloomberg Television’s “In the Loop” with Betty Liu. “Our advice is to really pack a broad basket, something that gives you diversification across sectors, ideally across countries.”

The Chicago Board Options Exchange Volatility Index closed at 34.51 yesterday, above the 21-year average of 20.5 as European leaders struggle to contain the region’s debt crisis. Telephone companies in the S&P 500 lost 4.7 percent this year through yesterday, while energy stocks rose 0.4 percent.

To contact the reporter on this story: Kaitlyn Kiernan in New York at kkiernan2@bloomberg.net.

To contact the editor responsible for this story: Nick Baker at nbaker7@bloomberg.net.