We use cookies to understand how you use our site and to improve your experience.
This includes personalizing content and advertising.
By pressing "Accept All" or closing out of this banner, you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties.
You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
In addition, whether you "Accept All," Deny Optional," click the X or otherwise continue to use the site, you accept our Privacy Policy and Terms of Service, revised from time to time.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Peace deal optimism weakens as geopolitical risks resurface in the Middle East.
Fragile Iran peace prospects are reinforcing the need for defensive portfolio positioning.
ETFs like VXX, VIXY, USMV and SPLV can offer protection against downside during market swings.
Optimism surrounding a potential peace deal between Washington and Tehran strengthened over the weekend after President Trump stated that the United States and Iran were close to finalizing a memorandum of understanding aimed at reopening the Strait of Hormuz. The comments initially boosted hopes that easing geopolitical tensions could help stabilize global markets.
However, the path toward a lasting agreement once again appeared uncertain after reports emerged that U.S. and Israeli aircraft struck Iranian vessels and additional targets in the Strait of Hormuz. While markets had earlier absorbed the initial shock from the Middle East conflict, investor sentiment is now increasingly being driven by the uncertainty surrounding whether a durable peace agreement can ultimately be achieved.
This volatile backdrop highlights the importance of adopting a more conservative and defensive approach to portfolio positioning, with increased exposure to volatility and low-volatility ETFs to help hedge against downside risks, particularly while the prospects of a conclusive and lasting agreement between the two sides remain uncertain.
U.S. Central Command (CENTCOM) stated that American forces targeted Iranian missile launch sites and boats attempting to place mines in the Strait of Hormuz, as quoted on Yahoo Finance. CENTCOM spokesperson Captain Tim Hawkins described the strikes as defensive measures aimed at protecting U.S. troops from threats posed by Iranian forces, as quoted on the abovementioned article.
CNBC reported that Iran’s Islamic Revolutionary Guard Corps warned of retaliation against any ceasefire violations after detecting and engaging U.S. drones and an F-35 fighter jet that allegedly entered Iranian airspace. Meanwhile, peace negotiations became more complicated after President Trump said on Monday that he had urged several Middle Eastern nations to join the Abraham Accords with Israel.
ETFs That Investors Can Consider
With the prospects of a lasting peace deal still complicated and elusive, the following funds may offer ways to navigate both market risks and opportunities.
Volatility ETFs for Navigating Risks
Increasing exposure to volatility ETFs in the short term can be a winning move for investors. These funds have delivered short-term gains during periods of market chaos and may climb further if volatility continues. Increased exposure to volatility ETFs is emerging as a compelling strategy, not only as a hedge against potential short-term downside risks but also as a way to benefit from lingering market uncertainty.
Investors can consider iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) , ProShares VIX Short-TermFutures ETF (VIXY - Free Report) and ProShares VIX Mid-Term Futures ETF (VIXM - Free Report) .
With a one-month average trading volume of 8.31 million shares, VXX is the most liquid option, offering investors easier entry and exit, making it well-suited for tactical positioning and short-term hedging strategies in the current volatile economic backdrop.
VXX has gathered an asset base of $560.2 million, the largest asset base among the other options. Regarding charging annual fees, VIXY and VIXM are the cheapest options, charging 0.85%.
Low-Volatility ETFs to Help Steady Your Portfolio
Low-volatility ETFs seek to provide a smoother investment experience by focusing on stocks that historically exhibit lower levels of market volatility. These funds commonly favor defensive sectors, including healthcare, utilities and consumer staples, where earnings and demand tend to remain more stable during uncertain periods. This makes them attractive for investors looking to balance market exposure with downside protection.
Investors can consider iShares MSCI USA Min Vol Factor ETF (USMV - Free Report) , Invesco S&P 500 Low VolatilityETF (SPLV - Free Report) and iShares MSCI EAFE Min Vol Factor ETF (EFAV - Free Report) .
With a one-month average trading volume of 2.38 million shares, SPLV is the most liquid option, offering flexibility for investors implementing short-term portfolio hedges. USMV has gathered an asset base of $23.04 billion, the largest asset base among the other options.
Zacks' 7 Best Strong Buy Stocks (New Research Report)
Valued at $99, click below to receive our just-released report
predicting the 7 stocks that will soar highest in the coming month.
View the Zacks #1 Rank List
Image: Bigstock
U.S.-Iran Peace Deal Hopes Tested Again: ETFs Worth Holding
Key Takeaways
Optimism surrounding a potential peace deal between Washington and Tehran strengthened over the weekend after President Trump stated that the United States and Iran were close to finalizing a memorandum of understanding aimed at reopening the Strait of Hormuz. The comments initially boosted hopes that easing geopolitical tensions could help stabilize global markets.
However, the path toward a lasting agreement once again appeared uncertain after reports emerged that U.S. and Israeli aircraft struck Iranian vessels and additional targets in the Strait of Hormuz. While markets had earlier absorbed the initial shock from the Middle East conflict, investor sentiment is now increasingly being driven by the uncertainty surrounding whether a durable peace agreement can ultimately be achieved.
This volatile backdrop highlights the importance of adopting a more conservative and defensive approach to portfolio positioning, with increased exposure to volatility and low-volatility ETFs to help hedge against downside risks, particularly while the prospects of a conclusive and lasting agreement between the two sides remain uncertain.
U.S. Central Command (CENTCOM) stated that American forces targeted Iranian missile launch sites and boats attempting to place mines in the Strait of Hormuz, as quoted on Yahoo Finance. CENTCOM spokesperson Captain Tim Hawkins described the strikes as defensive measures aimed at protecting U.S. troops from threats posed by Iranian forces, as quoted on the abovementioned article.
CNBC reported that Iran’s Islamic Revolutionary Guard Corps warned of retaliation against any ceasefire violations after detecting and engaging U.S. drones and an F-35 fighter jet that allegedly entered Iranian airspace. Meanwhile, peace negotiations became more complicated after President Trump said on Monday that he had urged several Middle Eastern nations to join the Abraham Accords with Israel.
ETFs That Investors Can Consider
With the prospects of a lasting peace deal still complicated and elusive, the following funds may offer ways to navigate both market risks and opportunities.
Volatility ETFs for Navigating Risks
Increasing exposure to volatility ETFs in the short term can be a winning move for investors. These funds have delivered short-term gains during periods of market chaos and may climb further if volatility continues. Increased exposure to volatility ETFs is emerging as a compelling strategy, not only as a hedge against potential short-term downside risks but also as a way to benefit from lingering market uncertainty.
Investors can consider iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX - Free Report) , ProShares VIX Short-Term Futures ETF (VIXY - Free Report) and ProShares VIX Mid-Term Futures ETF (VIXM - Free Report) .
With a one-month average trading volume of 8.31 million shares, VXX is the most liquid option, offering investors easier entry and exit, making it well-suited for tactical positioning and short-term hedging strategies in the current volatile economic backdrop.
VXX has gathered an asset base of $560.2 million, the largest asset base among the other options. Regarding charging annual fees, VIXY and VIXM are the cheapest options, charging 0.85%.
Low-Volatility ETFs to Help Steady Your Portfolio
Low-volatility ETFs seek to provide a smoother investment experience by focusing on stocks that historically exhibit lower levels of market volatility. These funds commonly favor defensive sectors, including healthcare, utilities and consumer staples, where earnings and demand tend to remain more stable during uncertain periods. This makes them attractive for investors looking to balance market exposure with downside protection.
Investors can consider iShares MSCI USA Min Vol Factor ETF (USMV - Free Report) , Invesco S&P 500 Low Volatility ETF (SPLV - Free Report) and iShares MSCI EAFE Min Vol Factor ETF (EFAV - Free Report) .
With a one-month average trading volume of 2.38 million shares, SPLV is the most liquid option, offering flexibility for investors implementing short-term portfolio hedges. USMV has gathered an asset base of $23.04 billion, the largest asset base among the other options.