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Global stocks have been on a wild ride this year due to red-hot inflation, Fed rate hikes and the resultant rise in the greenback, hawkish global central banks, Russia-Ukraine war, surging energy prices, zero-COVID policy in China and the resultant occasional lockdowns, global supply chain woes and recession risks. The S&P 500 is down 21.4% this year (as of Oct 6, 2022).
After an already disastrous September, "the worst is yet to come," according to Credit Suisse, as quoted on Kitco. "Higher rates combine with ongoing shocks to lead us to cut GDP forecasts," the report of Credit Suisse said. "The euro area and the UK are in recession, China is in a growth recession, and the U.S. is flirting with recession."
The war in Ukraine has raised food and energy prices globally — in some places exponentially — with Russia, an important global energy and fertilizer supplier. The intensifying conflict has exposed the susceptibilities of global food and energy market.
Against this backdrop, below we highlight a few ETFs that could be less-hurt in the current economic environment.
The 95-stock fund looks to provide exposure to the global consumer staples sector, including allocations to United States (56.14%) and international stocks. The United Kingdom (12.47%), Switzerland (9.10%) and Japan (5.74%) take the next three spots. It charges 40 bps in fees. As markets are facing an alarming threat for rising inflation and recession, the lure for safe sectors like consumer staples has charged up globally. The fund is down 16.5% versus 21.4% decline in the S&P 500.
The underlying Solactive Global SuperDividend Index tracks the performance of 100 equally weighted companies that rank among the highest dividend yielding equity securities in the world. The index provider applies certain dividend stability filters. The fund charges 58 bps in fees and yields 15.79% annually.
The fund puts 15.79% weight in the United States, followed by 15.4% weight in Brazil and 11% focus on China and 10.8% exposure to Hong Kong. The fund is down more than 30% this year.
Franklin International Core Dividend Tilt Index ETF (DIVI - Free Report)
The underlying Morningstar Developed Markets ex-North America Dividend Enhanced Select Index is a systematic, rules-based proprietary index and aims to deliver a higher dividend yield than the Morningstar Developed Markets ex-North America Target Market Exposure Index.
The fund has 55.6% weight in Europe followed by 29% exposure to Asia. The international dividend ETF yields 9.92% annually and charges only 9 bps in fees. It is down 21% this year. High dividend yields will make up for capital losses recorded by the fund.
The underlying S&P Global 1200 Energy Sector Index measures the performance of companies that are part of the energy sector of the economy & that are important to global markets. Component companies include oil equipment and services, oil exploration and production, oil refinery, oil storage and transportation & coal and uranium mining companies.
The fund yields 3.85% annually and charges 40 bps in fees. The fund is up 35% this year. The year 2022 can be recognized for the oil price rally. Most recently, the OPEC+ has announced steep output cuts to boost oil prices amid apprehension of falling demand due to recession risks.
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4 Global ETFs to Win Amid Rising Recession Risks
Global stocks have been on a wild ride this year due to red-hot inflation, Fed rate hikes and the resultant rise in the greenback, hawkish global central banks, Russia-Ukraine war, surging energy prices, zero-COVID policy in China and the resultant occasional lockdowns, global supply chain woes and recession risks. The S&P 500 is down 21.4% this year (as of Oct 6, 2022).
After an already disastrous September, "the worst is yet to come," according to Credit Suisse, as quoted on Kitco. "Higher rates combine with ongoing shocks to lead us to cut GDP forecasts," the report of Credit Suisse said. "The euro area and the UK are in recession, China is in a growth recession, and the U.S. is flirting with recession."
Credit Suisse sees global GDP at 2.6% this year and 1.6% next year. Growth in the United States is expected to be "close to zero" this year and advance just 0.8% in 2023. The International Monetary Fund downgraded its global growth projections already four times. It now expects 3.2% for 2022 and now 2.7% for 2023.
The war in Ukraine has raised food and energy prices globally — in some places exponentially — with Russia, an important global energy and fertilizer supplier. The intensifying conflict has exposed the susceptibilities of global food and energy market.
Against this backdrop, below we highlight a few ETFs that could be less-hurt in the current economic environment.
ETFs in Focus
iShares Global Consumer Staples ETF (KXI - Free Report)
The 95-stock fund looks to provide exposure to the global consumer staples sector, including allocations to United States (56.14%) and international stocks. The United Kingdom (12.47%), Switzerland (9.10%) and Japan (5.74%) take the next three spots. It charges 40 bps in fees. As markets are facing an alarming threat for rising inflation and recession, the lure for safe sectors like consumer staples has charged up globally. The fund is down 16.5% versus 21.4% decline in the S&P 500.
Global X SuperDividend ETF (SDIV - Free Report)
The underlying Solactive Global SuperDividend Index tracks the performance of 100 equally weighted companies that rank among the highest dividend yielding equity securities in the world. The index provider applies certain dividend stability filters. The fund charges 58 bps in fees and yields 15.79% annually.
The fund puts 15.79% weight in the United States, followed by 15.4% weight in Brazil and 11% focus on China and 10.8% exposure to Hong Kong. The fund is down more than 30% this year.
Franklin International Core Dividend Tilt Index ETF (DIVI - Free Report)
The underlying Morningstar Developed Markets ex-North America Dividend Enhanced Select Index is a systematic, rules-based proprietary index and aims to deliver a higher dividend yield than the Morningstar Developed Markets ex-North America Target Market Exposure Index.
The fund has 55.6% weight in Europe followed by 29% exposure to Asia. The international dividend ETF yields 9.92% annually and charges only 9 bps in fees. It is down 21% this year. High dividend yields will make up for capital losses recorded by the fund.
iShares Global Energy ETF (IXC - Free Report)
The underlying S&P Global 1200 Energy Sector Index measures the performance of companies that are part of the energy sector of the economy & that are important to global markets. Component companies include oil equipment and services, oil exploration and production, oil refinery, oil storage and transportation & coal and uranium mining companies.
The fund yields 3.85% annually and charges 40 bps in fees. The fund is up 35% this year. The year 2022 can be recognized for the oil price rally. Most recently, the OPEC+ has announced steep output cuts to boost oil prices amid apprehension of falling demand due to recession risks.