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ETF Strategies to Mark as Virus Scare May Hit Global Growth

Sweta Jaiswal, FRM

Globally, more than 43,100 people have been infected with the coronavirus, the fatality count crossing the 1000-mark. The numbers have surpassed those recorded during the 2002-2003 SARS outbreak. Along with impact on human resources, global investors are majorly worried about the impact this might have on financial markets and majorly on China’s economy as it makes up for about 17% of global GDP.

Estimates on the impact of the virus on the global economy have been issued by leading companies. Per Moody’s Analytics and Barclays, the coronavirus outbreak will dent global GDP by 0.3% in 2020. Meanwhile, analysts at Oxford Economics  predict a 0.2% drop in the current year. Moreover, the World Bank estimates  a more intensive pandemic to result in economic losses of roughly 5% of global GDP or more than $3 trillion. It also estimates that 0.5% of global GDP will be affected if the current coronavirus eruption turns out to be a weaker pandemic like swine flu in 2009.

ETF Strategies to Follow

Given the situation, let’s look at some ETF strategies that investors can follow for a smooth sail in these turbulent times.

Dividend ETFs

In a low-interest rate environment, dividend investing has been the hot spot. Against this backdrop, dividend ETFs like WisdomTree U.S. Quality Dividend Growth Fund DGRW, FlexShares Quality Dividend Defensive Index Fund QDEF, WBI Power Factor High Dividend ETF WBIY and Schwab US Dividend Equity ETF SCHD might be compelling picks (read: 7 Dividend ETFs That Offer Growth in 2020).

REIT ETFs

Real estate investment trusts (REITs) have had a good run on the bourses in 2019. A dovish Fed can be cited as the main driving factor. When interest rate drops, mortgage rates fall, making real estate or refinancing mortgages more affordable. This in turn boosts real estate sales. These funds offer outsized yields and act as good investing options when increased safe-haven trades keep yields at check. In view of this, investors can consider ETFs like JPMorgan BetaBuilders MSCI US REIT ETF BBRE, iShares Core U.S. REIT ETF USRT, Nuveen Short-Term REIT ETF NURE, Invesco S&P 500 Equal Weight Real Estate ETF EWRE and Schwab U.S. REIT ETF SCHH  (read: Homebuilder ETFs Shining in 2020: Will This Continue?).

Metals ETFs

Prices of precious metals like gold and silver rise during chaotic market conditions. This enhances the appeal of iShares Silver Trust SLV, Invesco DB Silver Fund DBS, SPDR Gold Trust ETF GLD, iShares Gold Trust IAU and Aberdeen Standard Physical Palladium Shares ETF PALL (read: Palladium ETF Continues to Surge in 2020: What Lies Ahead?).

Utility ETFs

The rising tensions are causing investors to seek refuge in safer investment options, with the utility sector grabbing major attention. The sector is among the most stable for the long term as its players are likely to offer decent returns, irrespective of market conditions. It is known for its non-cyclical nature and acts as a safe haven for investors during erratic stock market conditions. Moreover, utilities act as a defensive option to stay invested in more rewarding equity markets. In view of this, investors can consider The Utilities Select Sector SPDR Fund XLU, Vanguard Utilities ETF VPU, iShares U.S. Utilities ETF IDU and Fidelity MSCI Utilities Index ETF FUTY (read: ETFs to Buy as Utilities Are Favored Amid Virus Scare).

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SPDR Gold Shares (GLD): ETF Research Reports
 
iShares Gold Trust (IAU): ETF Research Reports
 
Utilities Select Sector SPDR ETF (XLU): ETF Research Reports
 
iShares Silver Trust (SLV): ETF Research Reports
 
Vanguard Utilities ETF (VPU): ETF Research Reports
 
Fidelity MSCI Utilities Index ETF (FUTY): ETF Research Reports
 
Invesco DB Silver ETF (DBS): ETF Research Reports
 
Schwab U.S. REIT ETF (SCHH): ETF Research Reports
 
WisdomTree U.S. Quality Dividend Growth ETF (DGRW): ETF Research Reports
 
FlexShares Quality Dividend Defensive ETF (QDEF): ETF Research Reports
 
Invesco S&P 500 Equal Weight Real Estate ETF (EWRE): ETF Research Reports
 
iShares U.S. Utilities ETF (IDU): ETF Research Reports
 
Aberdeen Standard Physical Palladium Shares ETF (PALL): ETF Research Reports
 
WBI Power Factor High Dividend ETF (WBIY): ETF Research Reports
 
Sprint Corporation (S) : Free Stock Analysis Report
 
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