Wall Street had a tumultuous day on May 5, triggered by the concerns over implications of the Fed’s biggest interest rate rise in 22 years. The S&P 500 fell 3.6%, erasing about $1.3 trillion of market value and marking the second-worst day of the year.
Meanwhile, the Dow Jones Industrial declined more than 1,000 points and the tech-heavy Nasdaq Composite Index fell nearly 5%. Both indexes notched their worst single-day drops since 2020. Though almost every sector has declined sharply on the day, a few ETFs were still in green and look to be solid picks in the market environment. Simplify Interest Rate Hedge ETF ( PFIX Quick Quote PFIX - Free Report) rose more than 5% in yesterday’s trading session, while Cambria Value and Momentum ETF ( VAMO Quick Quote VAMO - Free Report) , Cambria Tail Risk ETF ( TAIL Quick Quote TAIL - Free Report) , AGFiQ US Market Neutral Anti-Beta Fund ( BTAL Quick Quote BTAL - Free Report) and Invesco S&P 500 Downside Hedged ETF ( PHDG Quick Quote PHDG - Free Report) were also in green. These funds follow some kind of strategies in the investment world. Fed Chair Jerome Powell raised interest rates by 50 bps as expected, pushing the benchmark above 0.75%. The hike marks the biggest interest-rate increase since 2000. With inflation running at a 40-year high of 8.5%, the central bank also signaled that it would keep hiking at the same pace over the next couple of meetings. Signals that the Fed will not consider a rate hike by 75 bps at a future meeting were welcomed by investors initially but evaporated later, on worries about the impact of the Fed’s moves on the broader economy (read: 4 ETFs to Ride on Fed's 50 Bps Rate Hike). An increase in interest rates means higher loan rates for consumers and businesses, including mortgages, credit cards and auto loans. Simplify Interest Rate Hedge ETF ( PFIX Quick Quote PFIX - Free Report)
Simplify Interest Rate Hedge ETF seeks to provide a hedge against a sharp increase in long-term interest rates and benefit from market stress when fixed-income volatility increases, while providing the potential for income. It buys put options on longer-term Treasury bonds to offer “the most liquid and the most cost-efficient way of getting interest rate protection.” Simplify Interest Rate Hedge ETF is the first ETF providing a simple, direct and transparent interest rate hedge.
PFIX has accumulated $262.6 million in its asset base since its debut a year ago and trades in an average daily volume of 154,000 shares. It charges 50 bps in annual fees (read: 3 New ETFs to Play Rising Rates). Cambria Value and Momentum ETF ( VAMO Quick Quote VAMO - Free Report) Cambria Value and Momentum ETF is an actively managed ETF providing exposure to a portfolio of companies that focus on all three factors — value, momentum, and tactical hedging — with the added benefit of lower volatility and protection from market downturns. Cambria Value and Momentum ETF results in a basket of 101 securities. Cambria Value and Momentum ETF has accumulated $31.4 million in its asset base while trading in an average daily volume of 6,000 shares. The expense ratio comes in at 0.64%. Cambria Tail Risk ETF ( TAIL Quick Quote TAIL - Free Report) Cambria Tail Risk ETF seeks to mitigate significant downside market risk as it invests in a portfolio of "out of the money" put options purchased on the U.S. stock market. The TAIL strategy offers the potential advantage of buying more puts when volatility is low and fewer puts when volatility is high. While a portion of the fund's assets will be invested in the basket of long put option premiums, the majority of fund assets will be invested in intermediate-term U.S. Treasuries. Cambria Tail Risk ETF has amassed $402.2 million in its asset base and charges 59 bps in annual fees from investors. It trades in a volume of 442,000 shares a day on average. AGFiQ US Market Neutral Anti-Beta Fund ( BTAL Quick Quote BTAL - Free Report) AGFiQ US Market Neutral Anti-Beta Fund has the potential to generate positive returns regardless of the direction of the stock market as long as low-beta stocks outperform high-beta stocks. It invests primarily in long positions in low-beta U.S. equities and short positions in high beta U.S. equities on a dollar-neutral basis within sectors (read: Best ETF Areas of a Brutal April). AGFiQ US Market Neutral Anti-Beta Fund has AUM of $122.9 million and an expense ratio of 2.53%. It trades in an average daily volume of 155,000 shares. Invesco S&P 500 Downside Hedged ETF ( PHDG Quick Quote PHDG - Free Report) Invesco S&P 500 Downside Hedged ETF is an actively managed fund and seeks to deliver positive returns in rising or falling markets that are not directly correlated to broad equity or fixed-income market returns. Invesco S&P 500 Downside Hedged ETF tries to follow the S&P 500 Dynamic VEQTOR Index, which provides broad equity market exposure with an implied volatility hedge by dynamically allocating between different asset classes: equity, volatility and cash. The index allows investors to receive exposure to the equity and volatility of the S&P 500 Index in a dynamic framework. Invesco S&P 500 Downside Hedged ETF has accumulated $351 million in its asset base and charges 40 bps in fees per year from its investors. Volume is good, exchanging 146,000 shares a day on average.