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Inverse ETFs to Tap With No End to Russia-Ukraine War in Sight
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Stocks have been under pressure to start the week, following four successive weeks of decline. Higher energy prices arising out of the Russia-Ukraine war added to the already-high inflation and may derail the global economic recovery from the coronavirus pandemic.
Oil prices have been hovering around a 13-year high. West Texas Intermediate crude futures, the U.S. oil benchmark, hit $130 per barrel at one point before retreating again to $117 a barrel level. Brent crude, jumped to $139.13 per barrel — its highest since July 2008 — before pulling back to around $121. Gas prices surged to their highest level since 2008, with the national average hitting $4.06 a gallon, according to AAA.
“Stagflation is rapidly becoming the central focus in portfolio strategies,” said Jim Paulsen, chief investment strategist for the Leuthold Group, as quoted on CNBC. “Preparing for slower growth and more persistent inflation is driving investor fears and actions,” he added.
Meanwhile, Russia and Ukraine held a third round of talks and UN said more than 1.7 million refugees have fled. Ukraine accused Moscow of manipulating its cease-fire arrangement by only allowing Ukrainian civilians to evacuate to Russia and Belarus, per CNBC. Over the weekend, multiple evacuation attempts were paused after Russian forces were accused of violating cease-fires, as quoted on a CNBC article.
The Russian government compiled a list of nations and territories deemed “unfriendly” to Russia, according to state media in Moscow, quoted on CNBC. This probably triggered the fear of the stoppage of Russian energy supply to the dependent nations, mainly in Europe.
Forecasters expect the United States to see a decline in GDP growth with higher inflation, Europe’s economy will be on the verge of entering into recession and Russia’s GDP will experience a double-digit decline amid the geopolitical conflict, as quoted on a CNBC article.
With signs of improvement in sight, investors should thus take shelter under the inverse equity ETFs. These ETFs gain while equities fall.
ETFs in Focus
ProShares Short MSCI EAFE (EFZ - Free Report) – Up 7.73% Past Week
The underlying MSCI EAFE Index includes 85% of free float-adjusted market capitalization in each industry group in developed market countries, excluding the United States and Canada. EFZ charges 95 bps in fees.
ProShares Short FTSE China 50 (YXI - Free Report) – Up 6.5% Past Week
The underlying FTSE China 50 Index comprises the 50 largest and most-liquid Chinese stocks listed on the Hong Kong Stock Exchange. YXI charges 95 bps in fees.
ProShares Short MSCI Emerging Markets (EUM - Free Report) – Up 6.1% Past Week
The underlying MSCI Emerging Markets Index includes 85% of free float-adjusted market capitalization in each industry group in emerging market countries. These are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey. The fund charges 95 bps in fees.
AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report) – Up 4.1% Past Week
The AdvisorShares Dorsey Wright Short ETF is actively-managed with an investment focus that involves buying securities that have appreciated in price more than the other securities in the investment universe and holding those securities until they underperform. The expense ratio of the ETF is 3.68%.
ProShares Short Financials (SEF - Free Report) – Up 4.1% Past Week
The Dow Jones U.S. Financials Index measures the performance of the financial services industry of the U.S. equity market. The fund charges 95 bps in fees.
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Inverse ETFs to Tap With No End to Russia-Ukraine War in Sight
Stocks have been under pressure to start the week, following four successive weeks of decline. Higher energy prices arising out of the Russia-Ukraine war added to the already-high inflation and may derail the global economic recovery from the coronavirus pandemic.
Oil prices have been hovering around a 13-year high. West Texas Intermediate crude futures, the U.S. oil benchmark, hit $130 per barrel at one point before retreating again to $117 a barrel level. Brent crude, jumped to $139.13 per barrel — its highest since July 2008 — before pulling back to around $121. Gas prices surged to their highest level since 2008, with the national average hitting $4.06 a gallon, according to AAA.
“Stagflation is rapidly becoming the central focus in portfolio strategies,” said Jim Paulsen, chief investment strategist for the Leuthold Group, as quoted on CNBC. “Preparing for slower growth and more persistent inflation is driving investor fears and actions,” he added.
Meanwhile, Russia and Ukraine held a third round of talks and UN said more than 1.7 million refugees have fled. Ukraine accused Moscow of manipulating its cease-fire arrangement by only allowing Ukrainian civilians to evacuate to Russia and Belarus, per CNBC. Over the weekend, multiple evacuation attempts were paused after Russian forces were accused of violating cease-fires, as quoted on a CNBC article.
The Russian government compiled a list of nations and territories deemed “unfriendly” to Russia, according to state media in Moscow, quoted on CNBC. This probably triggered the fear of the stoppage of Russian energy supply to the dependent nations, mainly in Europe.
Forecasters expect the United States to see a decline in GDP growth with higher inflation, Europe’s economy will be on the verge of entering into recession and Russia’s GDP will experience a double-digit decline amid the geopolitical conflict, as quoted on a CNBC article.
With signs of improvement in sight, investors should thus take shelter under the inverse equity ETFs. These ETFs gain while equities fall.
ETFs in Focus
ProShares Short MSCI EAFE (EFZ - Free Report) – Up 7.73% Past Week
The underlying MSCI EAFE Index includes 85% of free float-adjusted market capitalization in each industry group in developed market countries, excluding the United States and Canada. EFZ charges 95 bps in fees.
ProShares Short FTSE China 50 (YXI - Free Report) – Up 6.5% Past Week
The underlying FTSE China 50 Index comprises the 50 largest and most-liquid Chinese stocks listed on the Hong Kong Stock Exchange. YXI charges 95 bps in fees.
ProShares Short MSCI Emerging Markets (EUM - Free Report) – Up 6.1% Past Week
The underlying MSCI Emerging Markets Index includes 85% of free float-adjusted market capitalization in each industry group in emerging market countries. These are: Brazil, Chile, China, Colombia, Czech Republic, Egypt, Hungary, India, Indonesia, Korea, Malaysia, Mexico, Morocco, Peru, Philippines, Poland, Russia, South Africa, Taiwan, Thailand and Turkey. The fund charges 95 bps in fees.
AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report) – Up 4.1% Past Week
The AdvisorShares Dorsey Wright Short ETF is actively-managed with an investment focus that involves buying securities that have appreciated in price more than the other securities in the investment universe and holding those securities until they underperform. The expense ratio of the ETF is 3.68%.
ProShares Short Financials (SEF - Free Report) – Up 4.1% Past Week
The Dow Jones U.S. Financials Index measures the performance of the financial services industry of the U.S. equity market. The fund charges 95 bps in fees.