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5 Long/Short ETFs Handily Beating S&P 500 in 2018

Sanghamitra Saha

With volatility being the catchword in the broader equity market this year, investors might be interested in tracking down ETF areas that have managed to beat the broader market handily. With just few days left before we usher in a new year, the markets show no signs of stability.

This is especially true given the awaited outcome of the December 18-19 Fed meeting, the monetary policy outlook for 2019 and renewed global growth worries. Apart from these, an oil price slump, widespread tech selloffs, heightened trade tensions between the United States and China and fears of peaking U.S. economic growth were other bothersome factors.

A flattening yield curve has been rampant in the United States in 2018, sparking recessionary fears. Plus, a substantial slowdown has been noticed in the Euro zone and Japan this year despite a massive stimulus policy. Political tensions in the Euro zone and Brexit also kept troubling global markets in 2018 (read: Are Alarm Bells Ringing for These Europe ETFs?).

All of these dragged global markets into the red for the year. The S&P 500 is down about 5.6%, the Dow Jones Industrial Average is off about 4.6%, the NASDAQ Composite is losing about 3.7% (as of Dec 18, 2018) (read: Global Markets in Red for 2018: 8 Inverse ETF Winners).

Plus, all-world ETF iShares MSCI ACWI ETF ACWI is down 10.7%, Vanguard FTSE Europe ETF VGK is off 17.7%, iShares Asia 50 ETF AIA has lost 18.2%, iShares Latin America 40 ETF ILF has retreated 14% and iShares MSCI Emerging Markets ETF EEM is down 18.5%.

No wonder, investors sought safety and increasingly placed their bets on long/short ETFs to find a way around volatility. Below we highlight a few of these that have beaten the recent blues in the market and surpassed the S&P 500.

AGFiQ US Market Neutral Anti-Beta BTAL — Up 14.0%

The underlying Dow Jones U.S. Thematic Market Neutral Anti-Beta Index is a long/short market neutral index that is dollar-neutral (read: Are We Headed Toward Bear Market? ETFs to Save Your Portfolio).

ProShares Long Online/Short Stores ETF CLIX – Up 6.8%

The underlying index consists of long positions in the online retailers included in the ProShares Online Retail Index and short positions in the bricks and mortar retailers included in the Solactive-ProShares Bricks and Mortar Retail Store Index (read: ETF & Stock Picks to Bet on Upbeat Retail Sales in November).

AGFiQ US Market Neutral Momentum MOM – Up 5.4%

The underlying Dow Jones U.S. Thematic Market Neutral Momentum Index is a long/short market neutral index that is dollar-neutral. Its expense ratio is 1.88% annually.

ProShares RAFI Long/Short RALS – Up 0.7%

The underlying FTSE RAFI US 1000 Long/Short Total Return Index allocates an aggregate equal dollar amount to both long and short equity positions. The long equity positions consist of securities in the FTSE RAFI US 1000 Total Return Index, and the short equity positions comprise securities in the Russell 1000 Total Return Index (read: 5 Defensive ETFs to Survive Global Market Rout).

IQ Hedge Market Neutral Tracker ETF QMN – Down 2.0%

This underlying index typically invests in both long and short positions in asset classes while minimizing exposure to systematic risk. These strategies look to have a zero-beta exposure to one or more systematic risk factors, including the overall market as represented by the S&P 500 Index, economic sectors or industries, market cap, region and country.

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VANGD-FTSE EUR (VGK): ETF Research Reports
QS-US MN AN-BET (BTAL): ETF Research Reports
ISHARS-ASIA 50 (AIA): ETF Research Reports
ISHARS-EMG MKT (EEM): ETF Research Reports
ISHRS-MSCI ACWI (ACWI): ETF Research Reports
ISHARS-LATIN 40 (ILF): ETF Research Reports
PRO-RAFI L/S (RALS): ETF Research Reports
QS-US MN MOMNTM (MOM): ETF Research Reports
PRO-L ONL/S STR (CLIX): ETF Research Reports
IQ-HEDGE MKT NT (QMN): ETF Research Reports
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