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4 Sector ETFs Unaffected by Coronavirus Outbreak

Sweta Killa

After hitting a series of record highs, Wall Street took a beating over the past week, following the coronavirus outbreak, a deadly virus which originated in China. Notably, U.S. stocks saw their first weekly decline of this year last week and the worst drop since October on Jan 27 (read: Best and Worst ETFs of Last Week).

This is because the outbreak is expected to turn into a worldwide pandemic and disrupt international commerce. This, in turn, would hurt global growth and corporate earnings.

The latest report shows that the coronavirus has infected at least 2,800 people in China and killed 82. In the United States, at least 110 people are under investigation for the virus, according to the Centers for Disease Control and Prevention, while a handful of infections were reported in other countries such as France and Japan. Health officials say the virus has the potential to be more deadly than the 2002-2003 SARS outbreak, which killed nearly 800 people and infected more than 8,000 others.

The fast-spreading coronavirus has affected most corners of the broad market. In particular, airlines, casinos, cruise lines and leisure companies have been hit hard. The materials and industrial sector also suffered as China is a key consumer of the metals and remains an industrial hub. Semiconductor companies also bore the brunt as chip stocks have a lot of exposure to China. Energy sector too were hit hard on global slowdown worries (read: Virus Scare Weighs on Oil ETFs: Go Short for the Near Term).

However, a few still stood tall amid the turmoil. The sector, which is sensitive to domestic economic scenario like homebuilding, was unaffected. Gold stocks jumped on rise in gold price, which is often viewed as a store of value and a hedge against market turmoil. The yellow metal has risen to  levels not seen in six years. Meanwhile, safe haven sectors like utilities also rose on risk-off sentiments. We have highlighted one ETF from these sectors that are performing well amid the coronavirus scare (read: 5 ETFs to Protect Your Portfolio From Coronavirus Threat).

iShares U.S. Home Construction ETF ITB

This fund provides exposure to U.S. companies that manufacture residential homes by tracking the Dow Jones U.S. Select Home Construction Index. With AUM of $1.4 billion, it holds a basket of 45 stocks with heavy concentration on the top two firms. The product charges 42 bps in annual fees and trades in heavy volume of around 2.3 million shares a day on average. It has gained 2.6% in a week and has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: Homebuilder ETFs Shining in 2020: Will This Continue?).

Sprott Gold Miners ETF SGDM

This fund follows the Solactive Gold Miners Custom Factors Index, providing exposure to large-sized gold companies whose stocks are listed on Canadian and major U.S. exchanges. It holds 32 stocks in its basket with Canadian firm taking the lion’s share at 72.5% followed by 21.8% in the United States. The fund has amassed $188.7 million in its asset base and trades in moderate volume of around 61,000 shares a day. It charges 50 bps in annual fees from investors and has added 2.5% in a week.

Utilities Select Sector SPDR XLU

With AUM of $11.4 billion, this fund provides exposure to a small basket of 28 securities by tracking the Utilities Select Sector Index. Electric utilities takes the top spot in terms of sectors at 62.1%, closely followed by multi utilities (31.3%). The product charges 13 bps in annual fees and sees a massive volume of around 16.5 million shares on average. It has a Zacks ETF Rank #2 (Buy) with a Medium risk outlook (read: Bet on Favorite Sector ETFs & Stocks This Earnings Season).

iShares MSCI Global Silver and Metals Miners ETF SLVP

This fund offers exposure to companies that derive the majority of their revenues from silver exploration or metals mining and tracks the MSCI ACWI Select Silver Miners Investable Market Index. It holds 33 stocks in its basket and has accumulated $101.1 million in its asset base. The product charges 39 bps in annual fees and trades in average daily volume of 110,000 shares. SLVP is up 1.5% in a week.

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