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Wall Street has been badly hammered in the bank stock meltdown, leading to risk-off trade and greater the appeal for the lower-risk securities. U.S. bank stocks suffered the steepest decline in nearly three years, with the KBW Nasdaq Bank Index tumbling as much as 7.7%, its biggest one-day drop since June 2020. The contagion has been spread entirely on the global stock market.
Amid such scenario, low-risk ETFs like ProShares VIX Short-Term Futures ETF (VIXY - Free Report) , Simplify Tail Risk Strategy ETF , Noble Absolute Return ETF , Cambria Tail Risk ETF (TAIL - Free Report) and AGFiQ US Market Neutral Anti-Beta Fund (BTAL - Free Report) gained.
The slump came following the implosions at Silicon Valley Bank and Silvergate Capital, which sent shock waves across the banking sector. SVB Financial Group, a firm that specializes in venture-capital financing, took steps to shore up its capital position, stoking concern that soaring interest rates are eroding balance sheets across the financial industry. Shares of SVB fell more than 60%. On the other hand, Silvergate Capital, one of the crypto market’s top banks, said that it plans to shut down its operations and liquidate after the crypto industry’s meltdown sapped the company’s financial strength (read: Bitcoin Regains $25,000 Level: ETFs to Ride the Rally).
Additionally, the rounds of strong economic data and prevalent inflation have put a steeper-than-expected rate hike back on the table. Fed Chair Jerome Powell turned hawkish during his testimony to the Senate Banking Committee and opened the door to a half-point rate hike in March. The central bank would likely raise its key interest rate higher than anticipated and could resume larger hikes, citing a recent surge in job growth and inflation after slowing the pace in recent months.
According to CME Group's FedWatch tool, traders were betting that chances of a 50-bps rate hike at the Fed's March meeting were around 60%, up sharply from a probability of 31% before Powell's appearances in Congress (read: 4 Top Sector ETFs to Gain as Fed Signals Faster Rate Hikes).
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 $242.6 million in AUM and charges 85 bps in fees per year.
Simplify Tail Risk Strategy ETF – Up 6.2%
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 sell-offs. The fund deploys advanced options strategies that are designed to handle multiple types of market dislocations.
Simplify Tail Risk Strategy ETF has amassed $17.3 million in its asset base and charges 84 bps in annual fees from investors. It trades in a volume of 22,000 shares a day on average.
Noble Absolute Return ETF – Up 4.3%
Noble Absolute Return ETF seeks capital appreciation across a full market cycle. It constructs a portfolio consisting of long positions in best securities with improving circumstances and short positions in best securities with deteriorating circumstances. It charges 1.82% in annual fees (read: Powell Pulls Up These ETF Areas).
Noble Absolute Return ETF has gathered $36.2 million in its asset base since its inception in September 2022.
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 $204.8 million in its asset base and charges 59 bps in annual fees from investors. It trades in a volume of 220,000 shares a day on average.
AGFiQ US Market Neutral Anti-Beta Fund (BTAL - Free Report) – Up 1.6%
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 $399.3 million and an expense ratio of 1.54%.
Bottom Line
These products could be worthwhile for low-risk-tolerance investors. They also have the potential to outperform the broad market, especially if banking sector contagion and Fed’s fatser rate hike fears continue to dent investor sentiment.
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Low-Risk ETFs Roar Amid Bank-Led Market Sell-Off
Wall Street has been badly hammered in the bank stock meltdown, leading to risk-off trade and greater the appeal for the lower-risk securities. U.S. bank stocks suffered the steepest decline in nearly three years, with the KBW Nasdaq Bank Index tumbling as much as 7.7%, its biggest one-day drop since June 2020. The contagion has been spread entirely on the global stock market.
Amid such scenario, low-risk ETFs like ProShares VIX Short-Term Futures ETF (VIXY - Free Report) , Simplify Tail Risk Strategy ETF , Noble Absolute Return ETF , Cambria Tail Risk ETF (TAIL - Free Report) and AGFiQ US Market Neutral Anti-Beta Fund (BTAL - Free Report) gained.
The slump came following the implosions at Silicon Valley Bank and Silvergate Capital, which sent shock waves across the banking sector. SVB Financial Group, a firm that specializes in venture-capital financing, took steps to shore up its capital position, stoking concern that soaring interest rates are eroding balance sheets across the financial industry. Shares of SVB fell more than 60%. On the other hand, Silvergate Capital, one of the crypto market’s top banks, said that it plans to shut down its operations and liquidate after the crypto industry’s meltdown sapped the company’s financial strength (read: Bitcoin Regains $25,000 Level: ETFs to Ride the Rally).
Additionally, the rounds of strong economic data and prevalent inflation have put a steeper-than-expected rate hike back on the table. Fed Chair Jerome Powell turned hawkish during his testimony to the Senate Banking Committee and opened the door to a half-point rate hike in March. The central bank would likely raise its key interest rate higher than anticipated and could resume larger hikes, citing a recent surge in job growth and inflation after slowing the pace in recent months.
According to CME Group's FedWatch tool, traders were betting that chances of a 50-bps rate hike at the Fed's March meeting were around 60%, up sharply from a probability of 31% before Powell's appearances in Congress (read: 4 Top Sector ETFs to Gain as Fed Signals Faster Rate Hikes).
ETFs Gain Appeal
ProShares VIX Short-Term Futures ETF (VIXY - Free Report) – Up 10.8%
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 $242.6 million in AUM and charges 85 bps in fees per year.
Simplify Tail Risk Strategy ETF – Up 6.2%
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 sell-offs. The fund deploys advanced options strategies that are designed to handle multiple types of market dislocations.
Simplify Tail Risk Strategy ETF has amassed $17.3 million in its asset base and charges 84 bps in annual fees from investors. It trades in a volume of 22,000 shares a day on average.
Noble Absolute Return ETF – Up 4.3%
Noble Absolute Return ETF seeks capital appreciation across a full market cycle. It constructs a portfolio consisting of long positions in best securities with improving circumstances and short positions in best securities with deteriorating circumstances. It charges 1.82% in annual fees (read: Powell Pulls Up These ETF Areas).
Noble Absolute Return ETF has gathered $36.2 million in its asset base since its inception in September 2022.
Cambria Tail Risk ETF (TAIL - Free Report) – Up 1.6%
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 $204.8 million in its asset base and charges 59 bps in annual fees from investors. It trades in a volume of 220,000 shares a day on average.
AGFiQ US Market Neutral Anti-Beta Fund (BTAL - Free Report) – Up 1.6%
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 $399.3 million and an expense ratio of 1.54%.
Bottom Line
These products could be worthwhile for low-risk-tolerance investors. They also have the potential to outperform the broad market, especially if banking sector contagion and Fed’s fatser rate hike fears continue to dent investor sentiment.