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ETF Strategies to Sail Through New COVID-19 Strain-Led Volatility
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The world continues to struggle to control the coronavirus outbreak. Amid this ongoing health crisis, the discovery of a new COVID-19 strain has taken a toll on investor optimism about the introduction of coronavirus vaccines and another round of fiscal stimulus. This new variant, first discovered in England, has resulted in several nations imposing restrictions on travel from the U.K., per a CNN report. In fact, flights from the U.K. have been banned or travelers who have been in the country are facing restrictions in over two dozen countries, beginning from Italy to India to El Salvador, per a CNBC article.
Going on, concerns over the new virus strain impacted stocks of various airlines and cruise line operators which finished at their session lows, per the sources. Norwegian was down 1.6% and Royal Caribbean lost 0.7% on Dec 21. Moreover, American Airlines declined 2.5% after losing more than 5% previously, while United Airlines dropped 1.5% on the same day.
However, a CNN report states that Pfizer (PFE) and Moderna (MRNA) are testing their coronavirus vaccines for efficacy against the new mutated version of the virus that's been discovered in the U.K. and other countries (per the company statements). It is worth noting here that both the companies have received emergency use authorization from the FDA for their coronavirus vaccine.
Investors are worried that another round of business restrictions and lockdown measures might derail the economic recovery achieved so far. In such a scenario, investors can take a look at the following ETF strategies to combat the coronavirus crisis:
Dividend ETFs to Take Shelter In
In a low-interest rate environment, dividend investing becomes a hot spot. Against this backdrop, dividend ETFs like WisdomTree U.S. Quality Dividend Growth Fund (DGRW - Free Report) , FlexShares Quality Dividend Defensive Index Fund (QDEF - Free Report) , WBI Power Factor High Dividend ETF (WBIY) and Schwab US Dividend Equity ETF (SCHD) might be compelling picks (read: ETF Strategies to Play as Coronavirus Outbreak Aggravates).
Invest in the ‘New Normal’ Trends
In view of the rising work-from-home and online-shopping trends, increasing digital payments, growing video streaming and soaring video game sales are slowly becoming the “new normal.” With these new trends gaining momentum, Internet will remain a major requirement in daily lives. More and more people are spending time at home, in line with social-distancing guidelines due to the pandemic. Against this backdrop, let’s look at some Internet ETFs that will consistently gain traction from the spurt in demand for online gaming, shopping, video streaming and remote working trends due to the coronavirus crisis: First Trust Dow Jones InternetIndex (FDN - Free Report) , ARK Next Generation Internet ETF (ARKW - Free Report) , Invesco NASDAQ Internet ETF (PNQI), O’Shares Global Internet Giants ETF (OGIG) and Global X Internet of Things ETF (SNSR) (read: ETFs in Focus on Tesla's S&P 500 Debut).
Gold ETFs: Popular Safe-Haven Asset
The year 2020, majorly dominated by the coronavirus pandemic and geopolitical tensions, has been quite promising for safe-haven assets like gold. After peaking on safe-haven demand, gold lost its luster in recent months on the COVID-19 vaccine optimism. However, the recent surge in coronavirus cases, U.S.-China trade tensions and very easy global monetary policies will continue to provide some support. Moreover, weakness in U.S. dollar drove gold price higher. Gold ETFs mostly move in tandem with gold prices. The SPDR Gold Shares (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM) and GraniteShares Gold Trust (BAR) are some of the popular ETFs (read: Weekly ETF Roundup: U.S. Equity Attracts, Gold Loses).
Bet on Low-Volatility ETFs
Demand for funds with “low volatility” or “minimum volatility” generally increases during tumultuous times. These seemingly-safe products usually do not surge in bull market conditions but offer protection against unpredictable ones. Providing more stable cash flow than the overall market, these funds are less cyclical in nature. Here are some options -- iShares Edge MSCI Min Vol USA ETF (USMV - Free Report) , Invesco S&P 500 Low Volatility ETF (SPLV - Free Report) , iShares Edge MSCI EAFE Minimum Volatility ETF (EFAV), iShares Edge MSCI Min Vol Global ETF (ACWV ), Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) (read: Defensive ETF Strategies to Sail Through Soaring COVID-19 Cases).
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ETF Strategies to Sail Through New COVID-19 Strain-Led Volatility
The world continues to struggle to control the coronavirus outbreak. Amid this ongoing health crisis, the discovery of a new COVID-19 strain has taken a toll on investor optimism about the introduction of coronavirus vaccines and another round of fiscal stimulus. This new variant, first discovered in England, has resulted in several nations imposing restrictions on travel from the U.K., per a CNN report. In fact, flights from the U.K. have been banned or travelers who have been in the country are facing restrictions in over two dozen countries, beginning from Italy to India to El Salvador, per a CNBC article.
Going on, concerns over the new virus strain impacted stocks of various airlines and cruise line operators which finished at their session lows, per the sources. Norwegian was down 1.6% and Royal Caribbean lost 0.7% on Dec 21. Moreover, American Airlines declined 2.5% after losing more than 5% previously, while United Airlines dropped 1.5% on the same day.
However, a CNN report states that Pfizer (PFE) and Moderna (MRNA) are testing their coronavirus vaccines for efficacy against the new mutated version of the virus that's been discovered in the U.K. and other countries (per the company statements). It is worth noting here that both the companies have received emergency use authorization from the FDA for their coronavirus vaccine.
Investors are worried that another round of business restrictions and lockdown measures might derail the economic recovery achieved so far. In such a scenario, investors can take a look at the following ETF strategies to combat the coronavirus crisis:
Dividend ETFs to Take Shelter In
In a low-interest rate environment, dividend investing becomes a hot spot. Against this backdrop, dividend ETFs like WisdomTree U.S. Quality Dividend Growth Fund (DGRW - Free Report) , FlexShares Quality Dividend Defensive Index Fund (QDEF - Free Report) , WBI Power Factor High Dividend ETF (WBIY) and Schwab US Dividend Equity ETF (SCHD) might be compelling picks (read: ETF Strategies to Play as Coronavirus Outbreak Aggravates).
Invest in the ‘New Normal’ Trends
In view of the rising work-from-home and online-shopping trends, increasing digital payments, growing video streaming and soaring video game sales are slowly becoming the “new normal.” With these new trends gaining momentum, Internet will remain a major requirement in daily lives. More and more people are spending time at home, in line with social-distancing guidelines due to the pandemic. Against this backdrop, let’s look at some Internet ETFs that will consistently gain traction from the spurt in demand for online gaming, shopping, video streaming and remote working trends due to the coronavirus crisis: First Trust Dow Jones Internet Index (FDN - Free Report) , ARK Next Generation Internet ETF (ARKW - Free Report) , Invesco NASDAQ Internet ETF (PNQI), O’Shares Global Internet Giants ETF (OGIG) and Global X Internet of Things ETF (SNSR) (read: ETFs in Focus on Tesla's S&P 500 Debut).
Gold ETFs: Popular Safe-Haven Asset
The year 2020, majorly dominated by the coronavirus pandemic and geopolitical tensions, has been quite promising for safe-haven assets like gold. After peaking on safe-haven demand, gold lost its luster in recent months on the COVID-19 vaccine optimism. However, the recent surge in coronavirus cases, U.S.-China trade tensions and very easy global monetary policies will continue to provide some support. Moreover, weakness in U.S. dollar drove gold price higher. Gold ETFs mostly move in tandem with gold prices. The SPDR Gold Shares (GLD - Free Report) , iShares Gold Trust (IAU - Free Report) , SPDR Gold MiniShares Trust (GLDM) and GraniteShares Gold Trust (BAR) are some of the popular ETFs (read: Weekly ETF Roundup: U.S. Equity Attracts, Gold Loses).
Bet on Low-Volatility ETFs
Demand for funds with “low volatility” or “minimum volatility” generally increases during tumultuous times. These seemingly-safe products usually do not surge in bull market conditions but offer protection against unpredictable ones. Providing more stable cash flow than the overall market, these funds are less cyclical in nature. Here are some options -- iShares Edge MSCI Min Vol USA ETF (USMV - Free Report) , Invesco S&P 500 Low Volatility ETF (SPLV - Free Report) , iShares Edge MSCI EAFE Minimum Volatility ETF (EFAV), iShares Edge MSCI Min Vol Global ETF (ACWV ), Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) (read: Defensive ETF Strategies to Sail Through Soaring COVID-19 Cases).
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>