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4 Defensive ETFs to Play the Post-Thanksgiving Market Crash

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The new coronavirus strain, Omicron, is found to have had a much bigger impact on Wall Street than anticipated. Europe enacted lockdowns last week due to rising virus cases that started unnerving global investors. The World Health Organization called the new variant “highly transmissible.”

As a result, Wall Street had a bloodbath on Nov 26with the Dow Jones Industrial Index losing 2.53% in its worst post-Thanksgiving Day performance since 1931. The S&P 500 and the Nasdaq Composite posted their worst-ever returns post-Thanksgiving Day. The Russell 2000 lost 3.67% on Nov 26. Crude oil retreated 13% on that day, and investors struggled to find a green corner in Wall Street on Black Friday.

Cases of the new variant were found in Hong Kong, Belgium and Tel Aviv as well as in major South African cities like Johannesburg. Flights between South Africa and Europe were being subject to quarantine or being shut down altogether. Airline stocks along with the ones that favored economic reopening have been battered already.

All these raised worries regarding the sustainability of economic recovery from the pandemic-led slump. The flight to safety brought down the U.S. treasury yield to 1.48% on Nov 26 from 1.64% the day before. The Fed’s future policy action has also been jeopardized.

Earlier this month, the Fed's policy-setting committee announced that it would start scaling back its purchases of agency mortgage-backed securities and U.S. Treasuries, which it had been absorbing at a clip of about $120 billion a month since the depths of the pandemic.

Market strategists differ on the buying opportunity of the post-Thanksgiving selloff. Against this backdrop, one can seek refuge in the below-mentioned defensive ETFs until the broader market steadies.

ETFs in Focus

AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report) – Up 2.99% on Nov 26

The AdvisorShares Dorsey Wright Short ETF is actively managed with an investment focus that involves buying securities, which have appreciated in price more than the other securities in the investment universe, and holding those securities until they underperform. The annual expense ratio of DWSH is 3.67%.

Cambria Tail Risk ETF (TAIL - Free Report) – Up 2.80% on Nov 26

Cambria Tail Risk ETF is active and does not track a benchmark. The fund intends to invest in a portfolio of out-of-the-money put options purchased on the U.S. stock market. TAIL charges 59 bps in fees.

AGFiQ US Market Neutral Anti-Beta ETF (BTAL - Free Report) – Up 1.64% on Nov 26

The underlying Dow Jones U.S. Thematic Market Neutral Anti-Beta Index is a long/short market neutral index that is dollar-neutral. The expense ratio of AGFiQ US Market Neutral AntiBeta ETF is 2.19%.

Invesco S&P 500 Downside Hedged ETF (PHDG - Free Report) – Up 0.80% on Nov 26

Invesco S&P 500 Downside Hedged ETF is active and does not track a benchmark. The Invesco S&P 500 Downside Hedged ETF is an actively managed exchange-traded fund that seeks to achieve positive total returns in rising or falling markets that are not directly correlated to broad equity or fixed-income market returns. The expense ratio of PHDG is 0.40%.


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