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5 Safe ETFs to Play as Coronavirus Cases Rise Globally
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Global coronavirus recovery has been uneven in recent weeks with Europe and many emerging economies like India witnessing a surge in cases. No wonder, the vaccine-induced rally that took the charge of global markets at the start of the year has dissipated lately.
The third COVID-19 wave has hit Europe hard. Plans to ease restrictions have been withdrawn in several countries owing to the spread of the new variants of the virus. India has also been reporting rising virus cases. The scenario is however different in the United States with reopening of the economy still gaining traction.
Vaccine distribution and President Biden’s $1.9-trillion fiscal stimulus have been working in favor of U.S. economic growth. Most recently, AstraZeneca said that its COVID-19 vaccine was 76% effective at preventing symptomatic illness for its key U.S. trial.
The AstraZeneca vaccine is considered extremely important in handling the spread of COVID-19 across the globe. AstraZeneca vaccine is easier and cheaper to transport than shots launched by other vaccine makers. It has been given conditional marketing or emergency use authorization in more than 70 countries.
In short, the United States looks better-placed at the current level in tackling the coronavirus situation. But then the U.S. economy and the markets have its own set of issues, i.e., chances of a tax hike, U.S.-China tension and inflationary pressures.
Treasury Secretary Janet Yellen recently indicated that the U.S. government has more room to borrow (as lower rates have been helpful for the federal government to cover the interest costs on the debt), but higher taxes would likely be needed in the long run to fund the upcoming increases in spending (read: ETFs to Follow If Tax Hike Comes After $1.9-T Biden Stimulus).
Overall, global markets have fallen into an edgy spot lately. The benchmark U.S. Treasury yield was 1.62% on Mar 24, 2021, down 12 bps from the month’s high of 1.74% recorded on Mar 19, 2021. This happened because of renewed flight to safety.
Against this backdrop, below we highlight a few safe ETFs that could be tapped right now.
Invesco DB US Dollar Index Bullish ETF (UUP - Free Report)
The U.S. dollar has been rising lately against a bunch of other currencies as the demand outlook brightened for this safe-haven currency (read: U.S. Dollar to Strengthen? ETFs to Gain/Lose).
The underlying Deutsche Bank Long USD Currency Portfolio Index - Excess Return is a rules-based index composed solely of long U.S. Dollar Index futures contracts that trade on the ICE futures exchange.
As treasury yields have started to decline, treasury bond ETFs will now gain. The underlying ICE U.S. Treasury 7-10 Year Bond Index of the fund IEF measures the performance of public obligations of the U.S. Treasury that has a remaining maturity of greater than seven years and less than or equal to 10 years. The fund yields 1.01% annually.
Gold is a classic safe-haven asset. The metal was under pressure in recent times which calls for decent valuation too. The latest unsteadiness in the market may boost the metal’s value ahead (read: Invest in This Gold ETF for Income & Go Beyond Conventionalism).
In the current edgy investing backdrop, demand for low-volatility and high-quality ETFs will remain in place. Any deterioration in the virus outlook may bring back the lull in the market and low-volatility ETFs may benefit out of it. Notably, the ETF FLLV is active and does not track a benchmark. The fund yields 1.48% annually.
Staples is a non-cyclical and defensive sector. It will likely fare better if there are any disruptions in the economic recovery due to global rise in virus cases or tax hikes in the United States. The underlying Consumer Staples Select Sector Index looks to provide a representation of the consumer staples sector of the S&P 500 Index.
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5 Safe ETFs to Play as Coronavirus Cases Rise Globally
Global coronavirus recovery has been uneven in recent weeks with Europe and many emerging economies like India witnessing a surge in cases. No wonder, the vaccine-induced rally that took the charge of global markets at the start of the year has dissipated lately.
The third COVID-19 wave has hit Europe hard. Plans to ease restrictions have been withdrawn in several countries owing to the spread of the new variants of the virus. India has also been reporting rising virus cases. The scenario is however different in the United States with reopening of the economy still gaining traction.
Vaccine distribution and President Biden’s $1.9-trillion fiscal stimulus have been working in favor of U.S. economic growth. Most recently, AstraZeneca said that its COVID-19 vaccine was 76% effective at preventing symptomatic illness for its key U.S. trial.
The AstraZeneca vaccine is considered extremely important in handling the spread of COVID-19 across the globe. AstraZeneca vaccine is easier and cheaper to transport than shots launched by other vaccine makers. It has been given conditional marketing or emergency use authorization in more than 70 countries.
In short, the United States looks better-placed at the current level in tackling the coronavirus situation. But then the U.S. economy and the markets have its own set of issues, i.e., chances of a tax hike, U.S.-China tension and inflationary pressures.
Treasury Secretary Janet Yellen recently indicated that the U.S. government has more room to borrow (as lower rates have been helpful for the federal government to cover the interest costs on the debt), but higher taxes would likely be needed in the long run to fund the upcoming increases in spending (read: ETFs to Follow If Tax Hike Comes After $1.9-T Biden Stimulus).
Overall, global markets have fallen into an edgy spot lately. The benchmark U.S. Treasury yield was 1.62% on Mar 24, 2021, down 12 bps from the month’s high of 1.74% recorded on Mar 19, 2021. This happened because of renewed flight to safety.
Against this backdrop, below we highlight a few safe ETFs that could be tapped right now.
Invesco DB US Dollar Index Bullish ETF (UUP - Free Report)
The U.S. dollar has been rising lately against a bunch of other currencies as the demand outlook brightened for this safe-haven currency (read: U.S. Dollar to Strengthen? ETFs to Gain/Lose).
The underlying Deutsche Bank Long USD Currency Portfolio Index - Excess Return is a rules-based index composed solely of long U.S. Dollar Index futures contracts that trade on the ICE futures exchange.
iShares 710 Year Treasury Bond ETF (IEF - Free Report)
As treasury yields have started to decline, treasury bond ETFs will now gain. The underlying ICE U.S. Treasury 7-10 Year Bond Index of the fund IEF measures the performance of public obligations of the U.S. Treasury that has a remaining maturity of greater than seven years and less than or equal to 10 years. The fund yields 1.01% annually.
SPDR Gold Shares (GLD - Free Report)
Gold is a classic safe-haven asset. The metal was under pressure in recent times which calls for decent valuation too. The latest unsteadiness in the market may boost the metal’s value ahead (read: Invest in This Gold ETF for Income & Go Beyond Conventionalism).
Liberty US Low Volatility ETF (FLLV - Free Report)
In the current edgy investing backdrop, demand for low-volatility and high-quality ETFs will remain in place. Any deterioration in the virus outlook may bring back the lull in the market and low-volatility ETFs may benefit out of it. Notably, the ETF FLLV is active and does not track a benchmark. The fund yields 1.48% annually.
Consumer Staples Select Sector SPDR ETF (XLP - Free Report)
Staples is a non-cyclical and defensive sector. It will likely fare better if there are any disruptions in the economic recovery due to global rise in virus cases or tax hikes in the United States. The underlying Consumer Staples Select Sector Index looks to provide a representation of the consumer staples sector of the S&P 500 Index.
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>>