Though the broader market remains steady this year, the latest rise of geopolitical concerns may stall the ascent. The third quarter of 2017 started with concerns including North Korea’s
intercontinental missile launch and the possibility of a referendum in France if the key institutional reforms are not quickly approved by the parliament. Plus, there is a buzz that the ECB may retreat from the ultra-easy monetary policy sooner than expected. These have created chaos across the world.
North Korea declared its successful long-range test launch in Japanese waters, prior to the
G-20 meet to discuss ways to restrain North Korea’s weapons programs. On the other hand, French President Macron said he wants “to cut the number of lawmakers by a third and scrap a special judicial court that judges ministers” as well as reforms to be enacted within a year if a referendum is to be avoided (read: French Election Soothes Sentiments: ETFs Likely to Benefit).
Against such a backdrop, we have highlighted a few ETFs that may see some bullish trading ahead, especially if geopolitical tensions continue to escalate. These products will likely benefit from the crisis.
SPDR Gold Trust ETF GLD Gold is often viewed as a store of value and hedge against market turmoil. Gold prices recoiled from seven-week lows on July 4 following North Korea’s missile launch. The product tracking this bullion like GLD could be an interesting pick to play in the current market turbulence (read: Gold ETFs Tussle Between Geopolitics and Fed). Guggenheim CurrencyShares Japanese Yen Trust FXY
The Japanese currency, yen, is often considered a classic safe haven asset that gained some strength lately. Investors can target this currency via FXY, which measures the value of the yen against the price of the greenback (see:
all the Currency ETFs here). iShares 20+ Year Treasury Bond ETF TLT Though U.S. Treasuries were out of favor a few days back due to worries over Fed tightening, heightened global uncertainty may bring this safe bet in the limelight. The ultra-popular long-term Treasury ETF – TLT – tracks the Barclays Capital U.S. 20+ Year Treasury Bond Index. Apart from TLT, investors can also consider 25+ Year Zero Coupon U.S. Treasury Index Fund and ZROZ Vanguard Extended Duration Treasury ETF . EDV iPath S&P 500 VIX Short-Term Futures ETN ( VXX Quick Quote VXX - Free Report) The ETN focuses on the S&P 500 VIX Short-Term Futures Index, which reflects implied volatility of the S&P 500 Index at various points along the volatility forward curve. It provides investors with exposure to a daily rolling long position in the first and second month VIX futures contracts. If global market falls ahead, its ripple effects may hurt the key U.S. indices too and boost this volatility ETN. iShares Edge MSCI Min Vol Global ETF ACWV
Amid increasing signs of geopolitical risks, investors may safeguard their portfolio with low volatility ETFs like ACWV. This product offers exposure to global stocks that have lower volatility characteristics relative to the broader developed and emerging equity markets. The fund is heavy on the U.S. followed by Japan (read:
3 Low Volatility ETFs to Buy if Global Tensions Flare Up). PowerShares Russell 1000 Low Beta Equal Weight Portfolio USLB This fund seeks to track the performance of the Russell 1000 Low Beta Equal Weight Index, holding 378 stocks exhibiting low beta characteristics. It is widely diversified across components with each security accounting for less than 0.35% of total assets. Want key ETF info delivered straight to your inbox?
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