|Bid||43.10 x 900|
|Ask||43.50 x 2900|
|Day's Range||0.00 - 0.00|
|52 Week Range|
|PE Ratio (TTM)||N/A|
|YTD Daily Total Return||17.56%|
|Beta (3Y Monthly)||0.77|
|Expense Ratio (net)||0.30%|
With the S&P 500 up around 25% year-to-date and the other major domestic equity benchmarks residing near record highs, talking about downside protection may not be a high priority for all market participants at the moment.Then again, there is such a scenario as the "blow off top," which some market observers believe is happening as we speak. Add to that is the looming specter of 2020 being an election year and the day-to-day wranglings of the trade spat with China. Translation: now is as good of a time as any for investors to consider avenues for downside protection.Fortunately, that objective is easily met with an array of exchange traded funds (ETFs). In fact, ETFs are arguably the best instruments with which to bolster downside protection or profit from swooning equities because the fund structure eliminates the time constraints associated options strategies and the need to identify the right stocks to sell short.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * 7 Hot Stocks for 2020's Big Trends Best of all, investors do not need to be explicitly bearish to gain some downside buffer with ETFs. With that in mind, let's have a look at some of the best ETFs to use for protection in turbulent markets. iShares Edge MSCI Min Vol USA ETF (USMV)Source: Shutterstock Expense ratio: 0.15% per year, or $15 on a $10,000 investment.The iShares Edge MSCI Min Vol USA ETF (CBOE:USMV) is the king of one of this year's most popular ETF destinations, that being funds that emphasize low volatility. What makes USMV compelling for both short- and long-term investors is that the upside "sacrifice" in this fund is manageable as highlighted by its nearly 24% year-to-date gain.What that says about USMV, one this year's top asset-gathering ETFs, is that not only does it achieve its objective of lower downside capture when markets falter, but that it delivers ample upside when equities rally."One strategy that has been appealing when it comes to capturing less market downside is minimum volatility," BlackRock said in a recent note. "Minimum volatility is designed to reduce risk, while maintaining 100% equity exposure. Why is this important? Humans tend to experience the pain of losses more than the joys of equivalent gains, a bias known as 'loss aversion.'"Indeed, USMV's upside and downside capture specs are impressive."When we say that US minimum volatility has captured 80% of the upside of the S&P 500 but only 59% of the downside, many investors assume that means the strategy has lagged but with lower risk," according to BlackRock. "Yet, since its inception in 2008, minimum volatility has outperformed the S&P 500 by 2% annualized." ProShares Short QQQ (PSQ)Source: Shutterstock Expense ratio: 0.95%As its name implies, the ProShares Short QQQ (NYSEARCA:PSQ) is an inverse ETF, one designed to deliver the daily inverse performance of the widely-followed Nasdaq-100 Index. So if that benchmark falls by 1% on a given day, PSQ should rise by roughly the same amount.That means PSQ isn't a leveraged ETF, which expands its potential audience, because leveraged ETFs aren't intended for all investors. And because it's not a leveraged fund, PSQ can be held for longer periods than geared equivalents.There are no guarantees the following scenario materializes, but if markets weaken in significant fashion, many of the high-flying growth (technology and internet) names that dominate the Nasdaq-100 would be among the first to be hit. * 7 Retail Stocks to Buy That Dominated Thanksgiving Shopping Bottom line: PSQ is a fine hedge for investors with long exposure to tech ETFs or individual tech stars like Apple (NASDAQ:AAPL) and Microsoft (NASDAQ:MSFT). Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)Source: Shutterstock Expense ratio: 0.30%The Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD) checks at least two of 2019's big boxes: above-average dividend yields and reduced volatility. That said, the Invesco fund is a case study in the trade-off investors make when looking for lower volatility as the fund is higher by just 13.5% year-to-date.In its defense, SPHD has been 130 basis points less volatile than the S&P 500, and its dividend yield of about 4% is more than double that of the benchmark equity gauge. SPHD follows the S&P 500 Low Volatility High Dividend Index, a collection of the 50 S&P 500 members with the combination of lowest trailing 12-month volatility and high dividend yields.Due to the combination of defensive posture and high yields, stocks with those traits often trade at premium valuations, but that's not the case with SPHD as about 85% of the fund's roster are classified as value stocks. WisdomTree Yield Enhanced U.S. Aggregate Bond Fund (AGGY)Source: Shutterstock Expense ratio: 0.12%Fixed income instruments are among the first places investors flock to when seeking downside buffers. The WisdomTree Yield Enhanced U.S. Aggregate Bond Fund (NYSEARCA:AGGY) offers those benefits along with some spice relative to traditional aggregate bond ETFs, which are usually effective, but boring, low-yield instruments.AGGY slightly reduces exposure to Treasuries and U.S. agency debt while boosting investment-grade corporate bond exposure compared to more traditional rivals. The WisdomTree fund splits the widely-observed Bloomberg Barclays U.S. Aggregate Enhanced Yield Bond Index into 20 spheres. * 7 Stocks to Buy in December "Constraints are applied to ensure the fund does not deviate too far from the Aggregate Index," said Morningstar in a recent note. "For example, the index's duration must be within one year of the Aggregate Index's. Also, the weight of each sector is bound to stay within either 20% (for Treasuries, credit, and securitized bonds) or 10% (for agency bonds) of the Aggregate Index's weighting to each." Direxion MSCI USA Defensives Over Cyclicals ETF (RWDC)Source: Shutterstock Expense ratio: 0.45%As noted earlier, if markets rapidly swoon, it's likely that growth stocks would bear the brunt of that punishment. Should that scenario arise, the Direxion MSCI USA Defensives Over Cyclicals ETF (NYSEARCA:RWDC) would likely be in the spotlight.RWDC is a long/short ETF that, you guessed it, is long a defensive index and short a group of consumer discretionary, communication services and technology stocks, among others."RWDC seeks investment results that track the MSCI USA Defensive Sectors - USA Cyclical Sectors 150/50 Return Spread Index. The Index measures the performance of a portfolio that has 150% long exposure to the MSCI USA Defensive Sectors Index (the "Long Component") and 50% short exposure to the MSCI USA Cyclical Sectors Index (the "Short Component")," according to Direxion.Embracing RWDC doesn't mean sacrificing upside as highlighted by the fund's 4.30% gain over the past month. VanEck Vectors Real Asset Allocation ETF (RAAX)Expense ratio: 0.64%The VanEck Vectors Real Asset Allocation ETF (NYSEARCA:RAAX) is a compelling idea for investors looking for downside protection because this fund can move between being fully invested and cash allocations. Currently, RAAX is fully invested, but if markets tank it can raise cash and dramatically reduced equity exposure.Adding to its defensive posture, RAAX is not confined to owning common stocks. Rather, the fund currently features exposure to infrastructure, gold and other hard asset investments. RAAX is an ETF of ETFs, meaning its non-cash holdings are other ETFs. Six of the fund's 14 holdings are other VanEck products. * 9 Tech Stocks You Wish You'd Bought During 2019 RAAX "seeks to maximize real returns while seeking to reduce downside risk during sustained market declines by allocating primarily to exchange-traded products that provide exposure to real assets, which include commodities, real estate, natural resources, and infrastructure," according to VanEck. Invesco S&P SmallCap Low Volatility ETF (XSLV)Source: Beneath Blue / Shutterstock.com Expense ratio: 0.25%There are few certainties in financial markets, but among them are the following: small-cap stocks are more volatile than larger fare, and smaller stocks are likely to decline more when the broader market turns bearish.Investors can mitigate some of that risk with the Invesco S&P SmallCap Low Volatility ETF (NYSEARCA:XSLV). XSLV features the same trade-off as other low volatility strategies: less upside but less downside.This year, XSLV is rewarding investors as it's outpacing the S&P SmallCap 600 Index by 180 basis points while being 460 basis points less volatile.XSLV holds 120 stocks, nearly 70% of which hail from the financial services and real estate sectors.Todd Shriber owns shares of SPHD. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Hot Stocks for 2020's Big Trends * 7 Lumbering Large-Cap Stocks to Avoid * 5 ETFs for Oodles of Monthly Dividends The post 7 of the Best ETFs for Downside Protection appeared first on InvestorPlace.
As the ETF universe continues to expand, U.S. markets are seeing greater interest and adoption in smart beta or factor-based ETF strategies.
[Editor's note: "7 S&P 500 Dividend Stocks to Buy With Yields of at Least 3%" was previously published in June 2019. It has since been updated to include the most relevant information available.]In June, I read an article about Target (NYSE:TGT) that couldn't stop talking about the discount retailer's healthy dividend yield, which was yielding 3.15% as of Friday's close. While anything above 3% certainly can't be ignored, it turns out that 134 S&P 500 stocks currently offer a dividend yield of 3% or higher. So, the 3% yield isn't nearly as unique as many investors believe. For some investors, that means it might be smarter to consider ETFs that focus on dividend yields as part of their stock-selection process. InvestorPlace - Stock Market News, Stock Advice & Trading TipsThere are two high-dividend ETFs that focus on the S&P 500. The first is the Investco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD). It focuses on the 50 S&P 500 stocks that historically have provided high dividend yields and low volatility. The second is the SPDR Portfolio S&P 500 High Dividend ETF (NYSEARCA:SPYD), which owns 80 high dividend-yielding S&P 500 stocks. Either of these could do the trick. * 7 Stocks Under $7 to Invest in Now However, this is an article about individual stocks to buy, so I'm going to pick at least three S&P 500 dividend stocks from each of the two ETFs that are currently yielding 3% or more. Ford (F)Source: Jens Mayer via Flickr (Modified)Ford (NYSE:F) was yielding 6.3% as of Friday's close, making it the 11th highest yielding S&P 500 stock. Ford's got too a great deal of upside potential, including a move into electric vehicles that should see a good chunk of its fleet electrified by the end of 2022. Yielding 6.3% and generating plenty of free cash flow, Ford stock is a great play for dividend investors. Altria (MO)Source: Peyri Herrera via Flickr (Modified)Altria (NYSE:MO) was yielding 6.9% as of Friday's close., making it the 6th highest yielding S&P 500 stock. In recent years, Altria's become known more for its acquisitions outside the cigarette industry, than anything it's done in its core business. On June 3, Altria announced that it was buying 80% of a Swiss smokeless tobacco company, whose smokeless oral pouch On is already sold in the U.S. Paying $372 million for Burger Sohne, it's adding another non-combustible product to the Altria portfolio. In the past year, Altria's paid almost $15 billion to buy a minority stake in e-cigarette maker Juul Labs and a 45% interest in Cronos Group (NASDAQ:CRON), one of Canada's largest cannabis companies. Altria's doing everything it can to ensure that when the cigarette industry dies its ultimate death, these new areas of business will more than compensate for the loss of sales in its legacy business. * 7 Stocks Under $7 to Invest in Now Altria's another reliable generator of free cash flow virtually ensuring the long-term payment of its $3.20 a year dividend. Kimco Realty (KIM)Source: Shutterstock The next of our stocks to buy, Kimco Realty (NYSE:KIM), was yielding 5.9% as of Friday's close., making it the 15th highest yielding S&P 500 stock. One of the oldest REITs in the U.S., it owns more than 400 shopping centers across the country, providing more than 61 million square feet for potential tenants.For those who might be worried about a REIT involved in the retail industry, Kimco's made sure to get tenants that are changing with the times. Not to mention its shopping centers are located in major metro markets, with 77% of its revenue coming from grocery-anchored malls. In addition, Kimco does a good job diversifying its tenants. It currently has 7,900 leases with 3,700 tenants with the top 12 tenants generating just 22% of its annualized base rent (ABR). The area where investors should focus on is the work Kimco's doing to redevelop some of its malls and shopping centers. In 2021 and beyond, it expects to invest up to $250 million annually to add additional retail and mixed-use redevelopments to existing properties. As the markets begin to lose their luster, stocks like KIM will deliver nice dividends for its shareholders even if the capital appreciation isn't always there. Target (TGT)Source: Mike Mozart via Flickr (Modified)Target was yielding 3.15% as of Friday's close, making it the 124th highest yielding S&P 500 stock. Barely making it on to the list, I picked Target's stock because it appears to be on a bit of a roll in 2019. The discount retailer's latest quarterly results were better-than-expected beating revenue estimates by $140 million and earnings by nine cents a share. However, it was the retailer's same-store sales growth (+4.8%) and online revenue growth (+42%) that really stood out for investors. Not only did online sales grow by 42% in the quarter, they now account for 7.1% of Target's overall sales, 190 basis points higher than a year earlier. To be truly omnichannel, it's got to get to double digits, something I expect it will do by the end of the fiscal year. As a result of its Q1 2019 results, CEO Brian Cornell suggested that Target is "well positioned to deliver strong financial performance in 2019 and beyond."Target expects to earn $5.90 a share in 2019 with same-store sales growth in the low- to mid-single-digits. * 7 Stocks Under $7 to Invest in Now The investments the company has made in its stores, e-commerce, and supply chain are starting to pay off. As long as the economy remains strong, Target stock could see $100 by the end of the year, making it a prime stock to buy. Public Storage (PSA)Source: Mike Mozart Via FlickrPublic Storage (NYSE:PSA) was yielding 3.13% as of Friday's close. As the tariff wars continue to heat up, investors continue to seek out investments that aren't going to be affected by tariffs on imported Chinese and Mexican goods. One area that stands out as a safe haven is the self-storage industry, an industry that benefits from America's love affair with junk. Public Storage's business has always been an attractive one because it's part self-storage facility and part real estate investment. PSA has 2,444 self-storage facilities in 38 states amounting to 164 million square feet of rentable space. It also owns 35% of European self-storage leader Shurgard, which owns 231 facilities offering 13 million square feet of rentable space. If you look at its balance sheet from the quarter ended March 31, you'll see that Public Storage's real estate is valued on its books at $9.3 billion excluding accumulated depreciation. That's just 1.6% higher than a year earlier. There's a reason for that. The numbers on the balance sheet reflect the cost of the land and its buildings, not the market value they'd generate if they were sold. As the parking lot business, self-storage facilities are a great way to generate income from the real estate until the value becomes such that it's worth more to a developer for apartments, offices, and mixed-use facilities. To be paid 3.13% to wait for the real estate to mature is an outstanding deal. Coty (COTY)Source: Shutterstock Coty (NYSE:COTY) was yielding 4.9% as of Friday's close. The company is in the early stages of a turnaround that began by moving Pierre Laubies into the CEO job in November 2018, followed by the hiring of a new CFO in January 2019. The two executives will lead a conference call on July 1 that will cover the critical components of their turnaround plan. As part of the plan, Coty will look to simplify its business to reduce the supply chain problems it's experienced in the past year. Although revenues and earnings are down in 2019, Coty managed to generate free cash flow of $120.5 million in the first nine months of fiscal 2019, a considerable turnaround from the negative free cash flow of $129.8 million in the first nine months of 2018. * 7 Stocks Under $7 to Invest in Now Slowly, the business is improving and aCoty stock, up 58% in 2019, reflects that. Despite the upturn, COTY is still a stock to buy. General Mills (GIS)Source: Shutterstock General Mills (NYSE:GIS) was yielding 3.6% as of Friday's close. making it the 76th highest yielding S&P 500 stock. General Mills, like many large packaged foods companies, has suffered in recent years from a move to more healthy alternatives. And while most of the big players have tried to adapt to the new order, they've got a ways to go before they're back on top. At General Mills, it took CEO Jeff Harmening's promotion to the top job in June 2017 to get the ball rolling. But even he'll admit the transformation isn't nearly done. "What I'm most proud of is… the change in culture… We've brought in a lot of people from outside of the organization who have added a lot of value in things like strategic revenue management and global sourcing and ecommerce, and a new chief marketing officer [Ivan Pollard, who came from Coca-Cola North America in July 2017, and is building a global marketing/media planning structure]. And we've blended [them] with our internal talent," Harmening stated recently in an interview. General Mills continues to invest in its e-commerce business, which could represent as much as 10% of its sales within five years. As for acquisitions, its multi-billion purchase of Blue Buffalo pet foods has been a hit with both e-commerce and the mass retail channels. As it continues to transform its business, shareholders should see GIS stock move even higher. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * 4 Top American Penny Pot Stocks (Buy Before June 21) * The 4 FANG Stocks Won't Be Bitten By Regulation Threats * 10 Stocks to Buy That Could Be Takeover Targets * 4 Big Bank Stocks Rebounding The post 7 S&P 500 Dividend Stocks to Buy With Yields of at Least 3% appeared first on InvestorPlace.
In an uncertain market environment where trade wars make the major indexes succumb to wild swings, dividend exchange-traded funds can help provide the aspirin for investor headaches caused by volatility. Other challenges to dividend yields is a more cautious central bank that is deviating from its rate-hiking measures seen in 2018. 2019 is certainly seeing a more cautious Federal Reserve when juxtaposed with the rate-hiking machine it was in 2018.
Amid another flareup in the ongoing U.S./China trade dispute, market uncertainty is creeping higher. Earlier this week, the CBOE VIX Volatility Index, a widely followed gauge of investor uncertainty, spiked higher, prompting some analysts to speculate about a technical breakout.While market turbulence and uncertainty may reside on the higher end of the spectrum over the near-term, taking advantage of that theme via volatility-related exchange-traded funds (ETFs) is not something every investor indulges in. Volatility-related products are not safe ETFs. Rather, those products are intended for aggressive, sophisticated traders. * 10 Great Stocks to Buy on Dips Investors do not need to fret. There are plenty of funds that qualify as safe ETFs that help investors stay engage with equities while the U.S. and China workout their trade differences. Here are some ETFs to consider that could prove useful (and durable) over the near-term.InvestorPlace - Stock Market News, Stock Advice & Trading Tips Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)Expense Ratio: 0.30% per year, or $30 annually per $10,000 investedFor investors looking for a safe ETF that also includes a steady income stream, the Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD) is an idea to consider. The $3.21 billion SPHD currently yields 4%, or more than double the dividend yield on the S&P 500. SPHD's 50 holdings are the S&P 500 members with the highest dividend yields and the lowest trailing 12-month volatility, making the fund suitable for investors looking to skirt market turbulence.Because SPHD identifies stocks by dividend and volatility traits, this safe ETF's sector bets are not surprising. Currently, the Invesco fund devotes almost 38% of its combined weight to the real estate and utility sectors, groups known for above-average yields and below-average volatility.While SPHD is lagging the S&P 500 this year, the fund has held up somewhat better than the broader market since trade tensions sparked increased volatility last week. SPHD resides about 3.70% below its all-time high. For investors looking to make a long-term bet on a safe ETF, SPHD also makes sense because the fund pays a monthly dividend. iShares Edge MSCI Min Vol USA ETF (USMV)Expense Ratio: 0.15%As the largest low volatility ETF, the iShares Edge MSCI Min Vol USA ETF (CBOE:USMV) is bound to draw increased attention when headline risk rises and that has been the case in recent days as USMV is one of the top asset gatherers among U.S.-listed ETFs since the end of April.Minimum volatility "strategies aim to create a holistic portfolio with lower risk than the market," according to BlackRock. "The factor has historically delivered lower downside capture, but lower upside potential as well, making it more appropriate for investors seeking to reduce risk while still maintaining potential for returns similar to the broader market." * 10 Lithium Stocks to Buy Despite the Market's Irrationality USMV is a safe ETF, relatively speaking, but that does not make it a risk-free bet. Only about 44% of the ETF's sector allocations can be considered defensive and many of the fund's marquee holdings are large-cap multi-nationals that could be pinched by an ongoing trade spat with China, related tariffs or a subsequent rally by the U.S. dollar. iShares Core S&P Small-Cap ETF (IJR)Expense Ratio: 0.07%Small-cap stocks are usually more volatile than larger companies, so the current market environment may not appear conducive to embracing small-cap equities and ETFs such as the iShares Core S&P Small-Cap ETF (NYSEARCA:IJR). Upon further examination, IJR may indeed qualify as a safe ETF at the moment.Small caps typically generate the bulk of their revenue within the U.S., insulating them from trade wars. That is one advantage. Another advantage is that by virtue of that domestic focus, small caps are not pinched by a stronger U.S. dollar as are large-cap, multi-national companies. Amid geopolitical risk, global investors often bid the safe-haven dollar higher. That is often a drag on riskier assets, but a scenario small caps often meet with aplomb.At the sector level, IJR, which tracks the S&P SmallCap 600 Index, cements its domestic focus by allocating approximately half its weight to industrial, financial services and consumer discretionary names. In small-cap territory, those sectors are usually focused on the U.S. economy and do not have export-driven business models. Invesco S&P SmallCap Financials ETF (PSCF)Expense Ratio: 0.29%A small-cap sector fund rarely screams "safe ETF," but considering the lack of international exposure of small-caps and the same being true of the financial services sector, the Invesco S&P SmallCap Financials ETF (NASDAQ:PSCF) could prove to be a safe ETF.Consider this: over the past week, PSCF is down 0.40% while the large-cap S&P 500 is lower by 1.47% over the same period. Additionally, more than 37% of PSCF's 135 holdings are classified as value stocks, more than triple the number of names in the fund that are classified as growth stocks. As a result, PSCF trades at compelling multiples relative to broader small-cap benchmarks, such as the S&P SmallCap 600 and the Russell 2000. * 7 Cloud Stocks to Buy on Overcast Days Over the near-term, PSCF could prove to be a tactical, safe ETF play for slightly aggressive investors. PSCF has recently seen modest outflows, but that situation could rapidly reverse if the fund continues proving sturdy against large-cap plays. ProShares S&P 500 Dividend Aristocrats ETF (NOBL)Expense Ratio: 0.35%The ProShares S&P 500 Dividend Aristocrats ETF (CBOE:NOBL) is the second dividend fund on this list of safe ETFs and this dividend growth play merits plenty of consideration in this conversation. Recent and long-running history confirm that NOBL and its underlying index, the S&P 500 Dividend Aristocrats Index, are usually less volatile than broader equity indexes.Confirming NOBL's status as a safe ETF, the fund has a penchant for performing less poorly than the S&P 500 when the broader market slumps. NOBL did just that last year and its underlying index has even notched a few positive annual performances in years in which the S&P 500 finished lower.NOBL has a dividend yield that is nearly 30 basis points higher than the S&P 500's plus a quality tilt by virtue of its dividend growth emphasis make this a premier safe ETF idea for the current market environment.Todd Shriber owns shares of SPHD. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Dangerous Dividend Stocks to Stay Far Away From * 7 Tips for New Investors Young and Old * 10 Great Stocks to Buy on Dips Compare Brokers The post 5 Safe ETFs to Ride Out Market Uncertainty appeared first on InvestorPlace.
With the S&P 500 up about 15% year-to-date, it would appear safe to say that the bull market is intact. The other side of that discussion is that stocks plunged in the fourth quarter, basically entering a bear market while reminding investors that equities do not move up in a straight line and carrying some downside protection is necessary.While bull markets do not die of old age, there are signs this bull market is aging -- something many investors have acknowledged for some time. With first-quarter earnings season right around the corner, investors may want to consider how companies report earnings as one sign of an aging bull market."S&P 500 companies reported about $1.37 trillion in adjusted earnings for 2018. They reported $1.17 trillion in GAAP earnings last year as well," reports Barron's. "(GAAP is short for 'generally accepted accounting principles.') In other words, the accountants signed off on $1.2 trillion in earnings. Management told investors they earned $1.37 trillion."InvestorPlace - Stock Market News, Stock Advice & Trading TipsAdding to the case for the best funds for downside protection are numerous factors, including flareups in the U.S./China spat, the fear of the Federal Reserve potentially reversing course and raising interest rates this year and the specter of markets pricing in concerns regarding 2020 presidential candidates. * 7 Marijuana Companies: Which Pot Stocks Should You Buy? For investors looking for downside protection, these are some of the best funds to consider. Best Funds: Cambria Tail Risk ETF (TAIL)Expense Ratio: 0.59% per year, or $59 on a $10,000 investment.The Cambria Tail Risk ETF (CBOE:TAIL) is not just one of the best funds for portfolio protection, it is also one of the best to own when equities swoon. TAIL's fourth-quarter chart proves as much.The actively managed TAIL "offers the potential advantage of buying more puts when volatility is low and fewer puts when volatility is high," according to Cambria. "While a portion of the fund's assets will be invested in the basket of long put option premiums, the majority of fund assets will be invested in intermediate-term U.S. Treasuries. As the fund is designed to be a hedge against market declines and rising volatility, Cambria expects the fund to produce negative returns in the most years with rising markets or declining volatility."In other words, TAIL is one of the best funds when stocks are sinking, but when stocks are rising, TAIL is vulnerable, as highlighted by the fund's year-to-date loss of almost 13%. Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)Source: Shutterstock Expense ratio: 0.3%Low-volatility exchange-traded funds (ETFs) are often viewed as some of the best funds to consider when the market tumbles. The Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD) and rival "low vol" funds typically do not capture all of a bull market's upside, but perform less poorly in a bear market.If investors accept and understand that trait, SPHD can be one of the best funds if you're seeking income and downside protection. SPHD, which pays a monthly dividend, has a 12-month distribution rate of 3.9%, about double the dividend yield on the S&P 500. * 7 AI Stocks to Watch with Strong Long-Term Narratives Historically, defensive sectors with high dividend yields trade at premium valuations, but that is not the case with SPHD. The fund devotes over 38% of its combined weight to the defensive real estate and utilities sectors, but more than 76% of its holdings are classified as value stocks. ProShares Short QQQ (PSQ)Expense Ratio: 0.95%As the fourth quarter showed investors, when technology and other growth stocks fall out of favor, markets can rapidly deteriorate. One of the primary benefits of the tech-heavy Nasdaq-100 Index is that it overshoots more traditional broader equity benchmarks on the way up. However, with growth sectors, such as tech, communication services and consumer discretionary, commanding massive percentages of the overall U.S. equity market, declines in those groups usually permeate the entire market.The ProShares Short QQQ (NYSEARCA:PSQ) is ideal for buffering against tech declines. Importantly, PSQ is one of the best funds for traders new to inverse ETFs, because this product is not leveraged. Rather, PSQ is designed to deliver the daily inverse performance of the Nasdaq-100. So if that index falls 1% on a particular day, PSQ should rise 1%.Still, PSQ should be treated as a short-term instrument."Due to the compounding of daily returns, ProShares' returns over periods other than one day will likely differ in amount and possibly direction from the target return for the same period," according to ProShares. AGFiQ US Market Neutral Anti-Beta Fund (BTAL)Expense ratio: 0.76%Like the aforementioned TAIL, the AGFiQ US Market Neutral Anti-Beta Fund (NYSEARCA:BTAL) is one of the best funds when stocks are declining. Buying this fund in advance of those declines can be risky because if stocks continue trending higher, BTAL likely generates negative returns."BTAL's objective is to seek performance results that correspond to the price and yield performance, before fees and expenses, of the Dow Jones U.S. Thematic Market Neutral Anti-Beta Index," according to the fund's issuer. "BTAL strives to achieve this objective, by investing long in U.S. equities that have below average betas and shorting those securities that have above average betas, within sectors." * 10 Dow Jones Stocks Holding the Blue Chip Index Back BTAL is down 5% year-to-date, far better than the 13% loss sported by TAIL. In either case, investors are reminded these are among the best funds to own when equities are faltering. During lengthy moves to the upside, these products will lag. Global X | JPMorgan U.S. Sector Rotator Index ETF (SCTO)Expense Ratio: 0.83%The Global X | JPMorgan U.S. Sector Rotator Index ETF (NYSEARCA:SCTO) is a small, overlooked ETF that employs a momentum-based U.S. sector rotation strategy. Despite its diminutive status, this could be one of the best funds to own when stocks sink because SCTO can move to 100% cash when volatility spikes or stocks decline."SCTO seeks to limit equity volatility to a maximum of 20% by allocating assets to short term treasuries in more unstable markets," according to Global X.This fund may be more appropriate for conservative investors because it does not need markets to fall in order to generate positive returns. That said, SCTO is positioned defensively with over 51% of its combined weight currently allocated to the Consumer Staples Select SPDR (NYSEARCA:XLP) and the SPDR Dow Jones REIT ETF (NYSEARCA:RWR).As of this writing, Todd Shriber owned shares of SPHD. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Internet Stocks to Watch * 7 AI Stocks to Watch with Strong Long-Term Narratives * 10 Dow Jones Stocks Holding the Blue Chip Index Back Compare Brokers The post 5 of the Best Funds for Downside Protection appeared first on InvestorPlace.
Global growth worries, declining corporate profits in the United States and lingering U.S.-China trade tensions have given a life to low-volatility ETFs this year.
Low volatility ETFs had a few days in the sun last year, particularly in the fourth quarter when the S&P 500 tumbled nearly 15%.The S&P 500 finished 2018 with annualized volatility of 17%, the highest reading over the past six years, according to ETF Replay data. That market turbulence prompted investors to turn to low volatility ETFs for stability and those funds obliged. The two largest U.S.-listed low volatility ETFs outperformed the S&P 500 while sporting average annualized volatility of about 13%.And that's exactly what low volatility ETFs are supposed to do: be less volatile and perform less poorly than standard equity funds when the broader market declines. Those are the expectations investors should have from low volatility ETFs. Investors expecting low volatility to offer significant out-performance when stocks are surging are likely to be disappointed.InvestorPlace - Stock Market News, Stock Advice & Trading Tips * Buy These 5 Stocks to Play the Megatrend of the Century The thing about volatility is that it frequently catches investors off guard. In other words, it is better to be prepared than reactive when volatility spikes. Investors can do just that with these low volatility ETFs.Source: Shutterstock iShares Edge MSCI Min Vol Emerging Markets ETF (EEMV)Expense ratio: 0.25% per year, or $25 on a $10,000 investment.With the MSCI Emerging Markets Index up nearly 8% year-to-date, some investors will likely be tempted -- rightfully so -- to nibble at developing economies. Investors that want to do so in conservative fashion can do so with the iShares Edge MSCI Min Vol Emerging Markets ETF (BATS:EEMV), one of a few emerging markets low volatility ETFs.EEMV is up 5.10% year-to-date, reminding investors that international low volatility ETFs, like their domestic equivalents, can lag when the underlying market is rising. Still, EEMV has plenty of benefits for investors."True to its design, EEMV has historically provided investors with downside risk mitigation. In 2018, EEMV declined 58% less than that of broad EM as measured by the MSCI Emerging Markets Index," according to BlackRock. "If we extend the analysis to a longer period of time, similar performance behaviors hold. Since its first full month of live performance in November of 2011, EEMV has exhibited a downside capture of only 78%, reduced volatility by over 23%, and dampened the maximum drawdown by 22%."EEMV holds over 300 stocks. China and Taiwan combine for almost 40% of the fund's geographic weight.Source: Shutterstock Invesco S&P 500 High Dividend Low Volatility ETF (SPHD)Expense ratio: 0.30% per year, or $30 on a $10,000 investment.The Invesco S&P 500 High Dividend Low Volatility ETF (NYSEARCA:SPHD) is one of the best low volatility ETFs for investors looking for the benefits of reduced volatility and higher income. SPHD tracks an index comprised of the 50 S&P 500 stocks with the lowest trailing 12-month volatility and the highest dividend yields.The required combination of low volatility and high dividend yields can lead to some concentration risk at the sector level. After all, not all of the 11 sectors in the S&P 500 are considered light on volatility or high-yield plays. Not surprisingly, SPHD allocates about 49% of its weight to real estate and utilities names. Those sectors usually fit the bill as high-yield and less volatile than other sectors. * 7 Forever Stocks to Buy for Long-Term Gains For income investors, SPHD definitely makes sense as this low volatility ETF has a 12-month distribution rate of 4.06% -- almost double the S&P 500's dividend yield. SPHD has a five-star Morningstar rating.Source: Shutterstock Fidelity Low Volatility Factor ETF (FDLO)Expense ratio: 0.29% per year, or $29 on a $10,000 investment.Fidelity has an expanding lineup of cost-effective ETFs, including some factor-based strategies. The Fidelity Low Volatility Factor ETF (NYSEARCA:FDLO) is one of those funds.This low volatility ETF tracks the Fidelity U.S. Low Volatility Factor Index, "which is designed to reflect the performance of stocks of large and mid-capitalization U.S. companies with lower volatility than the broader market," according to Fidelity.Last year, FDLO beat the S&P 500 and was less volatile than the benchmark, but the Fidelity fund lagged the two largest low volatility ETFs. This year, FDLO is beating the biggest low volatility ETF. At the sector level, FDLO is unique relative to other low volatility ETFs. Technology is the largest sector weight in FDLO at 19.62% and FDLO allocates less than 7% of its combined weight to the real estate and utilities sectors.Todd Shriber owns shares of SPHD. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 10 Stocks That Every 20-Year-Old Should Buy * 10 Best Dividend Stocks to Buy for the Next 10 Months * 10 Monster Growth Stocks to Buy for 2019 and Beyond Compare Brokers The post 3 Low Volatility ETFs for Smooth Sailing in 2019 appeared first on InvestorPlace.