Stocks are enduring a predictable, though unappealing reaction to the COVID-19 outbreak. So what asset classes have investors been matriculating to?
Looking at the list of exchange traded funds that hit all-time highs on Tuesday, the group is heavily populated by fixed income funds. Add to that, gold prices have been soaring on the flight to safety trade. Over the past week, the SPDR Gold Shares (NYSE: GLD), the world's largest gold-backed ETF, is higher by 1.6%.
With that in mind, here are some ETFs that fit the bill as "safe."
VanEck Vectors Municipal Allocation ETF (MAAX)
Municipal bonds are usually considered boring...really boring. But boring has recently been beautiful. Just look at the VanEck Vectors Municipal Allocation ETF (CBOE: MAAX), which is residing near all-time highs and is up 3.36% year-to-date while the S&P 500 is off 7.15% over the past week.
MAAX, which has a 30-day SEC yield of nearly 3%, features four other VanEck municipal bond ETFs as its holdings, giving investors exposure to massive number of muni bonds across varying credit qualities and duration exposures.
MAAX “remains overweight both credit and duration relative to its benchmark. This positioning allows MAAX to generate a significantly higher yield than that of its benchmark with the goal of de-risking the portfolio during periods of extreme risk,” according to VanEck.
GraniteShares Gold Trust (BAR)
As noted above, gold is a popular, predictable safe-haven destination and that has been the case during the coronavirus outbreak. For the week ending Feb. 24, investors added $508.22 million to the aforementioned GLD, a total exceeded by just seven other ETFs.
Long-term investors would do well to not sleep on the GraniteShares Gold Trust (NYSE: BAR). With its annual fee of 0.17%, BAR is one of the least expensive gold ETFs in the world and offers the same upside qualities as legacy funds in this category.
This month, investors have almost $16 million to the cost-effective BAR, pumping its assets under management tally to almost $691 million.
Invesco S&P 500 Low Volatility ETF (SPLV)
The Invesco S&P 500 Low Volatility ETF (NYSE: SPLV) and other low volatility ETFs offer safety in relative terms, meaning they should perform less poorly when markets swoon. Credit SPLV, one of the largest ETFs in this category, for doing its job as it has outperformed the S&P 500 by about 210 basis points over the past week.
“By design, Low Vol aims at protection and participation,” S&P Dow Jones Indices said in a recent note. “A well-designed low volatility index should go down less when the market is down but also go up less when the market is up. Strong markets are the worst environments for low volatility indices, which generally underperform by the largest margin then.”
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