Beat Renewed Trade Tensions With These ETFs
The U.S.-China trade spat escalated all over again while it was on the verge of being resolving. Just when the global investing world took it as all settled, Trump said in a Sunday afternoon Twitter post that the current 10% tariffs on $200 billion worth of Chinese goods will jump to 25% on Friday. Moreover, Trump also said that he will impose 25% levies on an extra $325 billion of Chinese goods “shortly,” per CNBC. Following the latest tweet, China is reportedly mulling over canceling this week’s trade negotiations.
Investors should note that President Donald Trump announced a delay in the increase of tariffs on about $200 billion worth of Chinese goods in late February, citing “substantial progress” in trade talks with Beijing.
A group of market watchers believe that Trump’s decision to more than double the tariff rate on $200 billion of goods was intended to warn China not to start negotiations with more “empty offers,” per CNBC (read: US-China Trade Tensions Re-Escalate: 7 Vulnerable ETF Areas).
Needless to say, global market skidded on the news. Asian shares are hovering around a five-week low. Given this renewed uncertainty, there could be a surge in safety-seeking trading activities in the coming days. Also, the investing areas that are less trade-sensitive could see better trading in the near term. Investors thus could take refuge in the below-mentioned ETFs.
Invesco CurrencyShares Japanese Yen FXY
The product is designed to track the price of the Japanese yen, which is considered as a safe-haven asset. The fund charges 40 bps in fees. It was up 0.15% on May 6.
AGFiQ US Market Neutral Anti-Beta BTAL
Investors, who want to shift their focus to low-beta stocks in this uncertain market environment, can consider adding BTAL ETF to their portfolio. This fund follows the Dow Jones U.S. Thematic Market Neutral Anti-Beta Index benchmark. The index identifies the lowest-beta stocks and goes long on them, while at the same time going short on the highest-beta stocks. The fund charges 76 bps in fees and added 0.4% on May 6(read: Long/Short ETFs to Survive Market Turmoil).
iShares Russell 2000 ETF IWM
Small-cap stocks perform exceptionally well in an improving economy and are less susceptible to global market shocks. With the U.S. economy gaining traction as evident from better consumer spending, solid jobs and GDP data, we can be sanguine that the United States is better positioned in the developed market pack. One should try to cash in on the momentum by betting on IWM. Small-cap investing wards off global shocks like trade war (read: US Q1 GDP Growth Trumps Expectations: ETF Areas to Win).
Nuveen Short-Term REIT ETF (NURE)
If the market crashes, U.S. treasury yields will likely retreat on a surge in safe-haven demand. And if bond yields nosedive, the rate-sensitive sector REIT will likely score higher, benefiting NURE. The fund yields about 3.28% annually. The fund added more than 0.1% on May 6 (read: What Sell in May? Buy These ETFs Instead).
AGFiQ Hedged Dividend Income Fund DIVA
The fund follows the INDXX Hedged Dividend Income Index, which generates a high current yield and capital appreciation with risk similar to that of a corporate bond index. The index rebalances monthly by identifying the highest-dividend stocks as long positions, and the lowest-dividend stocks as short positions. The fund yields 4.59% annually. The fund is down only 0.1% on May 6.
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AGFiQ US Market Neutral Anti-Beta Fund (BTAL): ETF Research Reports
iShares Russell 2000 ETF (IWM): ETF Research Reports
Invesco CurrencyShares Japanese Yen Trust (FXY): ETF Research Reports
AGFiQ Hedged Dividend Income Fund (DIVA): ETF Research Reports
Nuveen Short-Term REIT ETF (NURE): ETF Research Reports
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