With just a few days left in September, Wall Street is heading toward the worst month, with the major indices in the bear market. Worries that super-aggressive Federal Reserve policy tightening to fight inflation would push the economy into recession are weighing on investors’ sentiment badly.
While most segments of the market are suffering from huge losses, a few have performed really well. Breakwave Dry Bulk Shipping ETF ( BDRY Quick Quote BDRY - Free Report) , Simplify Tail Risk Strategy ETF ( CYA Quick Quote CYA - Free Report) , Simplify Interest Rate Hedge ETF ( PFIX Quick Quote PFIX - Free Report) , Advocate Rising Rate Hedge ETF ( RRH Quick Quote RRH - Free Report) , and ProShares VIX Short-Term Futures ETF ( VIXY Quick Quote VIXY - Free Report) have gained in double digits. The S&P 500 hit lows last seen in late November 2020, while the Dow Jones Industrial Index also fell into bear territory early this week. The renewed selling pressure came after Fed Chair Jerome Powell raised interest rates by another 75 bps. This marks the third consecutive rate hike of 0.75% and pushed the benchmark interest rate to 3.0-3.25%, the highest level since 2008. With inflation nearly at a 40-year high, the central bank also signaled that additional large rate hikes were likely at upcoming meetings as it combats inflation. Fed officials now expect the federal funds rate at a range of 4.25% to 4.5%, a full percentage point above 3.25% to 3.5% to end 2022 that was projected in June. This means that the central bank could approve another three-quarter point hike at its November meeting and then a half-point rate rise in December. Economists warned that the rapid tightening would hurt the labor and housing markets, thereby pushing the economy into recession and impacting the stock market (read: 5 Defensive ETFs to Play as Recession Fears Grow). Breakwave Dry Bulk Shipping ETF ( BDRY Quick Quote BDRY - Free Report) – Up 31.2% Breakwave Dry Bulk Shipping ETF is the only freight futures ETF exclusively focused on dry bulk shipping market through a portfolio of near-dated freight futures contracts on dry bulk indices. It holds freight futures with a weighted average of approximately three months to expiration, using a mix of one-to-six-month freight futures based on the prevailing calendar schedule. Breakwave Dry Bulk Shipping ETF has accumulated about $49.6 million in AUM and trades in a good volume of about 334,000 shares per day on average. It charges a higher annual fee of 2.85%. Simplify Tail Risk Strategy ETF ( CYA Quick Quote CYA - Free Report) – Up 29.7% Simplify Tail Risk Strategy ETF seeks to provide income and capital appreciation while protecting against significant downside risk to investors by hedging diversified portfolios against severe equity market selloffs. The fund deploys advanced options strategies that are designed to handle multiple types of market dislocations. Simplify Tail Risk Strategy ETF has amassed $86.9 million in its asset base and charges 50 bps in annual fees from investors. It trades in a volume of 93,000 shares a day on average. Simplify Interest Rate Hedge ETF ( PFIX Quick Quote PFIX - Free Report) – Up 27.1% 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 (read: 5 ETFs Up 20% or More in the First Nine Months of 2022). PFIX has accumulated $335.3 million in its asset base and trades in an average daily volume of 153,000 shares. It charges 50 bps in annual fees. Advocate Rising Rate Hedge ETF ( RRH Quick Quote RRH - Free Report) – Up 20.5% Advocate Rising Rate Hedge ETF is a multi-asset ETF that seeks to generate capital appreciation during periods of rising long-term interest rates, specifically interest rates, with maturities of five years or longer. It is an actively managed fund and seeks to achieve its investment objective primarily by investing in a combination of U.S. Treasury securities; forwards, futures or options on various currencies; long and short positions on the short and long-end of the Treasury or swap yield curve via futures, swaps, forwards and other over-the-counter derivatives; long and short positions on equity indexes and investment companies, including ETFs; and commodity futures and options. Advocate Rising Rate Hedge ETF has accumulated $39.4 million in its asset base and charges 85 bps in annual fees. It trades in an average daily volume of 8,000 shares (read: Guide to Interest Rates Hike and ETFs). ProShares VIX Short-Term Futures ETF ( VIXY Quick Quote VIXY - Free Report) – Up 14.8% ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration. ProShares VIX Short-Term Futures ETF has amassed $437.7 million in AUM and charges 85 bps in fees per year. The fund trades in an average daily volume of around 10.5 million shares.