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The Russia-Ukraine conflict is continuously taking new twists and turns, keeping investors on edge. Russia’s atrocities on Ukrainians, labeled as “war crimes,” are being highly condemned by global leaders. After seeing the images from Bucha, northwest of Kyiv,some global leaders have proposed the idea of imposing more sanctions on Russia.
As true with any geopolitical factor, it is difficult to precisely project any economic outlook since the outcome of such conflicts is highly unpredictable. The same goes for the global economists amid the Russia-Ukraine conflict. However, if the crisis continues, supply-chain disruptions, rising commodity prices driving inflation levels and tightening monetary policies might reverse the economic recovery achieved so far globally.
Studying the current market conditions, we highlight a few ETF areas that have been showing strength and remained in the spotlight amid the Russia-Ukraine war:
Aerospace & Defense ETFs
Aerospace and defense space has witnessed growing investor inclination. NATO countries have been extending their support to Ukraine for fighting off the invasion by providing arms, ammunition and other military equipment. The United States has declared a huge military support package for Ukraine. Moreover, Canada has provided military protective equipment, anti-tank weapons systems and upgraded ammunition. Notably, Russia’s attack might push other countries to strengthen their military capacity and increase defense budgets. For instance, Germany has announced to raise its defense spending to 2% of gross domestic product from about 1.5% in 2021.
The major U.S. companies in the space like Lockheed Martin (LMT - Free Report) and Raytheon Technologies RTX have already gained about 12.7% ad 6.3% since the beginning of the Russian attack on Ukraine (as of Apr 1).
In this regard, investors can consider ETFs like iShares U.S. Aerospace & Defense ETF (ITA - Free Report) , SPDR S&P Aerospace & Defense ETF (XAR - Free Report) , ARK Space Exploration & Innovation ETF (ARKX) andSPDR S&P Kensho Future Security ETF (FITE) (read: ETFs to Watch in a Week Packed With Events).
Oil ETFs
Oil has witnessed an astonishing rally amid the Russia-Ukraine crisis. The growing number of sanctions on Russia is driving prices of the commodity. However, the United States releasing its reserve has led to some easing in oil prices and relaxing of concerns. Also, the resurging of COVID-19 cases in China and the imposition of lockdown to control it have led to fears of decreasing demand for oil.
The energy space has remained a prime investment area holding the interest of market participants since the beginning of the year. Reopening global economies, accelerated coronavirus vaccine rollout and improving labor markets were already adding to the strength in the sector. Going on, the rally in oil prices due to the Russia-Ukraine crisis has added to the momentum in the sector. Russian President’s demand for European nations to pay in ruble for gas added to more gains in the space.
Against the bullish energy sector backdrop, let’s take a look at some energy ETFs that are worth adding for more returns: Invesco Dynamic Energy Exploration & Production ETFPXE, Vanguard Energy ETF (VDE - Free Report) , Fidelity MSCI Energy Index ETF (FENY), The Energy Select Sector SPDR Fund (XLE) and iShares U.S. Energy ETF (IYE) (read: 5 ETFs Leading the Commodity Rally in March).
Agriculture ETFs
Russia and Ukraine undisputedly hold important positions as agricultural producers in the global commodities market. Thus, the escalation in tensions has sparked a rally in a broad range of commodities. The latest developments can also slow down production activities and impact the export of commodities and goods. This is true as the tensions have led to supply-disruption fears in an already-tight commodity market.
The yellow metal has enjoyed investors’ increased attention amid the Russia-Ukraine conflict. According to Kenneth Lamont, senior fund analyst for passive strategies at Morningstar, “There are a couple of things playing into the gold story. I think it’s people hedging their risk and also the added bonus that it has historically provided some level of inflation protection,” as stated in a Financial Times article.
Considering the current scenario, gold prices have been rising. The inflationary backdrop in the United States is favorable for gold as the metal is viewed as a hedge against inflation.
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: Best ETF Investment Strategies for Q2 2022).
Cybersecurity ETFs
Investors are paying great attention to cybersecurity stocks as these have been rallying amid the rising panic of cyberattacks. Market experts have warned about the possibility of cyberattacks by Russia in retaliation for Western sanctions. The West has been continuing to isolate Moscow by imposing several sanctions on Russian banks, its sovereign debt along with Russian President Vladimir Putin and Foreign Minister Sergey Lavrov. Notably, cyberattacks can be part of Russia’s war strategy. Several Ukrainian entities have already been hacked. Also, the increasing adoption of revolutionary technologies is exposing businesses, governments and organizations to cyber risks.
Investors seeking to tap the boom in the cyber security market could consider the following ETFs: ETFMG Prime Cyber Security ETF (HACK - Free Report) , First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report) , Global X Cybersecurity ETF (BUG) and iShares Cybersecurity and Tech ETF (IHAK) (read: Why Cybersecurity ETFs are Rising amid Russia-Ukraine Crisis).
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ETF Areas in Focus Amid the Russia-Ukraine Crisis
The Russia-Ukraine conflict is continuously taking new twists and turns, keeping investors on edge. Russia’s atrocities on Ukrainians, labeled as “war crimes,” are being highly condemned by global leaders. After seeing the images from Bucha, northwest of Kyiv,some global leaders have proposed the idea of imposing more sanctions on Russia.
As true with any geopolitical factor, it is difficult to precisely project any economic outlook since the outcome of such conflicts is highly unpredictable. The same goes for the global economists amid the Russia-Ukraine conflict. However, if the crisis continues, supply-chain disruptions, rising commodity prices driving inflation levels and tightening monetary policies might reverse the economic recovery achieved so far globally.
Studying the current market conditions, we highlight a few ETF areas that have been showing strength and remained in the spotlight amid the Russia-Ukraine war:
Aerospace & Defense ETFs
Aerospace and defense space has witnessed growing investor inclination. NATO countries have been extending their support to Ukraine for fighting off the invasion by providing arms, ammunition and other military equipment. The United States has declared a huge military support package for Ukraine. Moreover, Canada has provided military protective equipment, anti-tank weapons systems and upgraded ammunition. Notably, Russia’s attack might push other countries to strengthen their military capacity and increase defense budgets. For instance, Germany has announced to raise its defense spending to 2% of gross domestic product from about 1.5% in 2021.
The major U.S. companies in the space like Lockheed Martin (LMT - Free Report) and Raytheon Technologies RTX have already gained about 12.7% ad 6.3% since the beginning of the Russian attack on Ukraine (as of Apr 1).
In this regard, investors can consider ETFs like iShares U.S. Aerospace & Defense ETF (ITA - Free Report) , SPDR S&P Aerospace & Defense ETF (XAR - Free Report) , ARK Space Exploration & Innovation ETF (ARKX) andSPDR S&P Kensho Future Security ETF (FITE) (read: ETFs to Watch in a Week Packed With Events).
Oil ETFs
Oil has witnessed an astonishing rally amid the Russia-Ukraine crisis. The growing number of sanctions on Russia is driving prices of the commodity. However, the United States releasing its reserve has led to some easing in oil prices and relaxing of concerns. Also, the resurging of COVID-19 cases in China and the imposition of lockdown to control it have led to fears of decreasing demand for oil.
Against this backdrop, United States Oil Fund (USO - Free Report) , Invesco DB Oil Fund (DBO - Free Report) , United States Brent Oil Fund (BNO) and United States 12 Month Oil Fund (USL) can be kept an eye on (read: Oil Rallies Amid Russia-Ukraine Crisis: ETFs to Bet on).
Energy ETFs
The energy space has remained a prime investment area holding the interest of market participants since the beginning of the year. Reopening global economies, accelerated coronavirus vaccine rollout and improving labor markets were already adding to the strength in the sector. Going on, the rally in oil prices due to the Russia-Ukraine crisis has added to the momentum in the sector. Russian President’s demand for European nations to pay in ruble for gas added to more gains in the space.
Against the bullish energy sector backdrop, let’s take a look at some energy ETFs that are worth adding for more returns: Invesco Dynamic Energy Exploration & Production ETF PXE, Vanguard Energy ETF (VDE - Free Report) , Fidelity MSCI Energy Index ETF (FENY), The Energy Select Sector SPDR Fund (XLE) and iShares U.S. Energy ETF (IYE) (read: 5 ETFs Leading the Commodity Rally in March).
Agriculture ETFs
Russia and Ukraine undisputedly hold important positions as agricultural producers in the global commodities market. Thus, the escalation in tensions has sparked a rally in a broad range of commodities. The latest developments can also slow down production activities and impact the export of commodities and goods. This is true as the tensions have led to supply-disruption fears in an already-tight commodity market.
Following are some commodity ETFs that investors can keep track of as the geopolitical crisis worsens: Teucrium Wheat Fund (WEAT - Free Report) , Teucrium Corn Fund (CORN - Free Report) and The VanEck Agribusiness ETF (MOO) (read: 5 Commodity ETFs Enjoying Hot Streak in Q1).
Gold ETFs
The yellow metal has enjoyed investors’ increased attention amid the Russia-Ukraine conflict. According to Kenneth Lamont, senior fund analyst for passive strategies at Morningstar, “There are a couple of things playing into the gold story. I think it’s people hedging their risk and also the added bonus that it has historically provided some level of inflation protection,” as stated in a Financial Times article.
Considering the current scenario, gold prices have been rising. The inflationary backdrop in the United States is favorable for gold as the metal is viewed as a hedge against inflation.
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: Best ETF Investment Strategies for Q2 2022).
Cybersecurity ETFs
Investors are paying great attention to cybersecurity stocks as these have been rallying amid the rising panic of cyberattacks. Market experts have warned about the possibility of cyberattacks by Russia in retaliation for Western sanctions. The West has been continuing to isolate Moscow by imposing several sanctions on Russian banks, its sovereign debt along with Russian President Vladimir Putin and Foreign Minister Sergey Lavrov. Notably, cyberattacks can be part of Russia’s war strategy. Several Ukrainian entities have already been hacked. Also, the increasing adoption of revolutionary technologies is exposing businesses, governments and organizations to cyber risks.
Investors seeking to tap the boom in the cyber security market could consider the following ETFs: ETFMG Prime Cyber Security ETF (HACK - Free Report) , First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report) , Global X Cybersecurity ETF (BUG) and iShares Cybersecurity and Tech ETF (IHAK) (read: Why Cybersecurity ETFs are Rising amid Russia-Ukraine Crisis).