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Can Quality ETFs be Good Bets as Russia-Ukraine Tensions Rise?
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Market participants are bearing the brunt of escalating tensions between Ukraine and Russia. All the major market indices declined on Feb 22. The Dow Jones Industrial Average declined for the fourth consecutive trading day. The S&P 500 and Nasdaq Composite indices also declined, each losing 1% and 1.2%, respectively. In fact, the S&P 500 has entered the correction territory.
Going on, the three major broad market indices ended in the red last week as well, largely due to the Russia-Ukraine tensions and chances of Fed rate hikes. The Dow Jones Industrial Average has lost 1.9% in the last week ending Feb 18. Also, the S&P 500 and Nasdaq Composite were down 1.6% and 1.8%, respectively, in the same period.
Investors willing to sail through the current market turbulences from the latest Russia-Ukraine-related concerns can consider iShares MSCI USA Quality Factor ETF (QUAL - Free Report) , Invesco S&P 500 Quality ETF (SPHQ - Free Report) , FlexShares Quality Dividend Index Fund (QDF - Free Report) , SPDR MSCI USA StrategicFactors ETF (QUS - Free Report) and Barron's 400 ETF (BFOR - Free Report) .
President Joe Biden has informed about imposing sanctions on the major Russian bank VEB as well as its military bank, the country’s sovereign debt and on three wealthy individuals (two of them are the sons of high-ranking Russian government officials). According to the sources, the imposition of bank sanctions will forbid American financial institutions from dealing out transactions for VEB along with Russia’s military bank, PSB.
Regarding the sanctions on sovereign debt, President Biden has mentioned that “That means we’ve cut off Russia’s government from Western financing. It can no longer raise money from the West and cannot trade its new debt on our markets, or European markets either,” per a CNBC article.
Taking their stand against Russia, the U.K. has also announced the first tranche of economic sanctions aiming at five Russian Banks — Rossiya, IS Bank, General Bank, Promsvyazbank and the Black Sea Bank. Going on, the U.K. is also imposing sanctions on three very wealthy individuals, namely, Gennady Timchenko, Boris Rotenberg and Igor Rotenberg.
Quality ETFs Worth a Look
Quality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility and healthy margins. These stocks also have a track record of stable or rising sales and earnings growth. In comparison to plain vanilla funds, these products help lower volatility and perform rather well during market uncertainty. Further, academic research proved that high-quality companies constantly provide better risk-adjusted returns than the broader market over the long term.
Against such a backdrop, we have highlighted five ETFs targeting this niche strategy. These could enjoy smooth trading and generate market-beating returns in the current market scenario.
iShares MSCI USA Quality Factor ETF provides exposure to the large- and mid-cap stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage) by tracking the MSCI USA Sector Neutral Quality Index (read: 4 ETFs to Invest in on Rising Market Volatility).
Invesco S&P 500 Quality ETF tracks the S&P 500 Quality Index, a benchmark of S&P 500 stocks that has the highest-quality score based on three fundamental measures, namely, the return on equity, accruals ratio and the financial leverage ratio.
Expense Ratio: 0.15%
AUM: $3.86 billion
FlexShares Quality Dividend Index Fund (QDF - Free Report)
FlexShares Quality Dividend Index Fund seeks investment results that generally correspond to the price and yield performance, before fees and expenses, of the Northern Trust Quality Dividend Index.
SPDR MSCI USA StrategicFactors ETF offers exposure to stocks that combine value, low volatility and quality-factor strategies. This is done by tracking the MSCI USA Factor Mix A-Series Capped Index (read: Quality ETFs & Stocks for Likely Faster Fed Tightening & Omicron).
Image: Bigstock
Can Quality ETFs be Good Bets as Russia-Ukraine Tensions Rise?
Market participants are bearing the brunt of escalating tensions between Ukraine and Russia. All the major market indices declined on Feb 22. The Dow Jones Industrial Average declined for the fourth consecutive trading day. The S&P 500 and Nasdaq Composite indices also declined, each losing 1% and 1.2%, respectively. In fact, the S&P 500 has entered the correction territory.
Going on, the three major broad market indices ended in the red last week as well, largely due to the Russia-Ukraine tensions and chances of Fed rate hikes. The Dow Jones Industrial Average has lost 1.9% in the last week ending Feb 18. Also, the S&P 500 and Nasdaq Composite were down 1.6% and 1.8%, respectively, in the same period.
Investors willing to sail through the current market turbulences from the latest Russia-Ukraine-related concerns can consider iShares MSCI USA Quality Factor ETF (QUAL - Free Report) , Invesco S&P 500 Quality ETF (SPHQ - Free Report) , FlexShares Quality Dividend Index Fund (QDF - Free Report) , SPDR MSCI USA StrategicFactors ETF (QUS - Free Report) and Barron's 400 ETF (BFOR - Free Report) .
President Joe Biden has informed about imposing sanctions on the major Russian bank VEB as well as its military bank, the country’s sovereign debt and on three wealthy individuals (two of them are the sons of high-ranking Russian government officials). According to the sources, the imposition of bank sanctions will forbid American financial institutions from dealing out transactions for VEB along with Russia’s military bank, PSB.
Regarding the sanctions on sovereign debt, President Biden has mentioned that “That means we’ve cut off Russia’s government from Western financing. It can no longer raise money from the West and cannot trade its new debt on our markets, or European markets either,” per a CNBC article.
Taking their stand against Russia, the U.K. has also announced the first tranche of economic sanctions aiming at five Russian Banks — Rossiya, IS Bank, General Bank, Promsvyazbank and the Black Sea Bank. Going on, the U.K. is also imposing sanctions on three very wealthy individuals, namely, Gennady Timchenko, Boris Rotenberg and Igor Rotenberg.
Quality ETFs Worth a Look
Quality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility and healthy margins. These stocks also have a track record of stable or rising sales and earnings growth. In comparison to plain vanilla funds, these products help lower volatility and perform rather well during market uncertainty. Further, academic research proved that high-quality companies constantly provide better risk-adjusted returns than the broader market over the long term.
Against such a backdrop, we have highlighted five ETFs targeting this niche strategy. These could enjoy smooth trading and generate market-beating returns in the current market scenario.
iShares MSCI USA Quality Factor ETF (QUAL - Free Report)
iShares MSCI USA Quality Factor ETF provides exposure to the large- and mid-cap stocks exhibiting positive fundamentals (high return on equity, stable year-over-year earnings growth and low financial leverage) by tracking the MSCI USA Sector Neutral Quality Index (read: 4 ETFs to Invest in on Rising Market Volatility).
Expense Ratio: 0.15%
AUM: $21.80 billion
Invesco S&P 500 Quality ETF (SPHQ - Free Report)
Invesco S&P 500 Quality ETF tracks the S&P 500 Quality Index, a benchmark of S&P 500 stocks that has the highest-quality score based on three fundamental measures, namely, the return on equity, accruals ratio and the financial leverage ratio.
Expense Ratio: 0.15%
AUM: $3.86 billion
FlexShares Quality Dividend Index Fund (QDF - Free Report)
FlexShares Quality Dividend Index Fund seeks investment results that generally correspond to the price and yield performance, before fees and expenses, of the Northern Trust Quality Dividend Index.
Expense Ratio: 0.37%
AUM: $1.64 billion
SPDR MSCI USA StrategicFactors ETF (QUS - Free Report)
SPDR MSCI USA StrategicFactors ETF offers exposure to stocks that combine value, low volatility and quality-factor strategies. This is done by tracking the MSCI USA Factor Mix A-Series Capped Index (read: Quality ETFs & Stocks for Likely Faster Fed Tightening & Omicron).
Expense Ratio: 0.15%
AUM: $947.7 million
Barron's 400 ETF (BFOR - Free Report)
Barron's 400 ETF seeks investment results that generally correspond, before fees and expenses, to the performance of Barron's 400 Index.
Total Operating Expenses: 0.70%
AUM: $143.4 million