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Inflation has been red-hot in America and is not showing signs of cooling down. This is especially true as the latest data showed that U.S. consumer prices have accelerated at the fastest rate in May since 1981, as Americans grapple with a surge in the cost of gas, food and shelter.
Against such a scenario, we have highlighted five ETFs that could provide some shelter from the crisis and benefit investors’ portfolio. These include AGFiQ US Market Neutral Anti-Beta Fund (BTAL - Free Report) , Cambria Tail Risk ETF (TAIL - Free Report) , AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report) , Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI - Free Report) and Pacer Trendpilot Fund of Funds ETF (TRND - Free Report) .
The risk-off trade is likely to continue at least in the near term. Notably, the three major indexes are in a bear market and the latest inflation data accelerated recession fears. The consumer price index (CPI) jumped 8.6% year over year to a fresh 40-year high, from an 8.3% annual increase recorded in April. The data has put pressure on the Fed to extend an aggressive series of interest rate hikes and has added to political problems for the White House and Democrats.
Fed Chair Jerome Powell raised interest rates by 75 bps in its latest FOMC meeting, pushing the federal funds rate between 1.5% and 1.75%, to quell inflation through a tighter monetary policy. This marked the biggest interest-rate increase since 1994. Powell said that the Fed could raise rates by 50 or 75 basis points at the July Fed meeting and stressed that policy will be "sensitive and flexible.” This comment has renewed optimism in the market. All the Fed officials see rates rising to at least 3% by year-end, with a median estimate of 3.4%. They expect rates to rise to 3.8% by the end of 2023 (read: Fed Raises Rates by 75 bps: ETFs Set to Surge).
Overall, an increase in interest rates means higher loan rates for consumers and businesses, including mortgages, credit cards and auto loans. Additionally, the persistent rise in commodity prices and the aftermath of the Russia-Ukraine war have already been making investors jittery.
As the global economy is struggling with skyrocketing inflation and low growth, the World Bank has warned of a recession and slashed its global growth forecast. It now expects the global economy to expand 2.9% this year, down from 5.7% growth in 2021 and lower than the 401% expectation projected in January. The World Bank cautioned that many countries could fall into recession as the economy slips into a period of stagflation reminiscent of the 1970s.
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.
AGFiQ US Market Neutral Anti-Beta Fund has AUM of $168.9 million and an expense ratio of 2.53%. It trades in an average daily volume of 196,000 shares (read: 5 ETFs Surge As S&P 500 Slips to Bear Market).
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 $467.3 million in its asset base and charges 59 bps in annual fees from investors. It trades in a volume of 524,000 shares a day on average.
AdvisorShares Dorsey Wright Short ETF is an actively managed that short sells U.S. large-cap securities with the highest relative weakness within an investment universe primarily, comprising large-capitalization U.S.-traded equities. It holds 104 stocks in its basket, with consumer discretionary taking the largest share at 22.8%, while energy and healthcare round off the next two spots.
AdvisorShares Dorsey Wright Short ETF trades in a lower average daily volume of 56,000 shares and has accumulated $39.7 million in its asset base. It charges a higher annual fee of 3.68%.
Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI - Free Report)
Nationwide Nasdaq-100 Risk-Managed Income ETF targets high income with lower risk using a rules-based options trading strategy. It is designed for income-focused investors seeking to lower their exposure to market volatility and minimize the potential for losses during down markets (read: Low-Beta ETFs to Buy Amid Market Turmoil).
With AUM of $623.3 million, Nationwide Nasdaq-100 Risk-Managed Income ETF charges 68 bps in annual fees and trades in an average daily volume of 255,000 shares.
Pacer Trendpilot Fund of Funds ETF follows the Pacer Trendpilot Fund of Funds Index, which seeks to implement a systematic trend-following strategy that directs exposure to 100% to the equity component; or 50% to the equity component and 50% to 3-month US Treasury bills; or 100% to 3-month US Treasury bills, depending on the relative performance of the equity Component and its 200-business day historical simple moving average.
Pacer Trendpilot Fund of Funds ETF has amassed $62.4 million and charges 77 bps in annual fees. It trades in a volume of around 9,000 shares a day on average.
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Forget Recession Fears With These ETFs
Inflation has been red-hot in America and is not showing signs of cooling down. This is especially true as the latest data showed that U.S. consumer prices have accelerated at the fastest rate in May since 1981, as Americans grapple with a surge in the cost of gas, food and shelter.
Against such a scenario, we have highlighted five ETFs that could provide some shelter from the crisis and benefit investors’ portfolio. These include AGFiQ US Market Neutral Anti-Beta Fund (BTAL - Free Report) , Cambria Tail Risk ETF (TAIL - Free Report) , AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report) , Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI - Free Report) and Pacer Trendpilot Fund of Funds ETF (TRND - Free Report) .
The risk-off trade is likely to continue at least in the near term. Notably, the three major indexes are in a bear market and the latest inflation data accelerated recession fears. The consumer price index (CPI) jumped 8.6% year over year to a fresh 40-year high, from an 8.3% annual increase recorded in April. The data has put pressure on the Fed to extend an aggressive series of interest rate hikes and has added to political problems for the White House and Democrats.
Fed Chair Jerome Powell raised interest rates by 75 bps in its latest FOMC meeting, pushing the federal funds rate between 1.5% and 1.75%, to quell inflation through a tighter monetary policy. This marked the biggest interest-rate increase since 1994. Powell said that the Fed could raise rates by 50 or 75 basis points at the July Fed meeting and stressed that policy will be "sensitive and flexible.” This comment has renewed optimism in the market. All the Fed officials see rates rising to at least 3% by year-end, with a median estimate of 3.4%. They expect rates to rise to 3.8% by the end of 2023 (read: Fed Raises Rates by 75 bps: ETFs Set to Surge).
Overall, an increase in interest rates means higher loan rates for consumers and businesses, including mortgages, credit cards and auto loans. Additionally, the persistent rise in commodity prices and the aftermath of the Russia-Ukraine war have already been making investors jittery.
As the global economy is struggling with skyrocketing inflation and low growth, the World Bank has warned of a recession and slashed its global growth forecast. It now expects the global economy to expand 2.9% this year, down from 5.7% growth in 2021 and lower than the 401% expectation projected in January. The World Bank cautioned that many countries could fall into recession as the economy slips into a period of stagflation reminiscent of the 1970s.
AGFiQ US Market Neutral Anti-Beta Fund (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.
AGFiQ US Market Neutral Anti-Beta Fund has AUM of $168.9 million and an expense ratio of 2.53%. It trades in an average daily volume of 196,000 shares (read: 5 ETFs Surge As S&P 500 Slips to Bear Market).
Cambria Tail Risk ETF (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 $467.3 million in its asset base and charges 59 bps in annual fees from investors. It trades in a volume of 524,000 shares a day on average.
AdvisorShares Dorsey Wright Short ETF (DWSH - Free Report)
AdvisorShares Dorsey Wright Short ETF is an actively managed that short sells U.S. large-cap securities with the highest relative weakness within an investment universe primarily, comprising large-capitalization U.S.-traded equities. It holds 104 stocks in its basket, with consumer discretionary taking the largest share at 22.8%, while energy and healthcare round off the next two spots.
AdvisorShares Dorsey Wright Short ETF trades in a lower average daily volume of 56,000 shares and has accumulated $39.7 million in its asset base. It charges a higher annual fee of 3.68%.
Nationwide Nasdaq-100 Risk-Managed Income ETF (NUSI - Free Report)
Nationwide Nasdaq-100 Risk-Managed Income ETF targets high income with lower risk using a rules-based options trading strategy. It is designed for income-focused investors seeking to lower their exposure to market volatility and minimize the potential for losses during down markets (read: Low-Beta ETFs to Buy Amid Market Turmoil).
With AUM of $623.3 million, Nationwide Nasdaq-100 Risk-Managed Income ETF charges 68 bps in annual fees and trades in an average daily volume of 255,000 shares.
Pacer Trendpilot Fund of Funds ETF (TRND - Free Report)
Pacer Trendpilot Fund of Funds ETF follows the Pacer Trendpilot Fund of Funds Index, which seeks to implement a systematic trend-following strategy that directs exposure to 100% to the equity component; or 50% to the equity component and 50% to 3-month US Treasury bills; or 100% to 3-month US Treasury bills, depending on the relative performance of the equity Component and its 200-business day historical simple moving average.
Pacer Trendpilot Fund of Funds ETF has amassed $62.4 million and charges 77 bps in annual fees. It trades in a volume of around 9,000 shares a day on average.