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Bet on These Global ETFs on Likely Barrage of Stimulus

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The coronavirus scare has done what no global economic shock could do to the benchmark U.S. treasury yield. The 10-year Treasury bond yield dropped below 1% for the first time in history on Mar 3 and closed at 1.02% due to the heightened demand for safe-haven U.S. treasuries.

After all, economists warned about potential output loss. The Organization for Economic Cooperation and Development cautioned that an escalation in the coronavirus outbreak could slash global economic growth in half and lead several countries to recession this year. As a result, global central banks are planning to act dovish to counter the impact of the virus.

The Fed has already enacted an emergency rate cut of 50 bps on Mar 3 to contain the virus-led market rout and prevent any potential economic loss. Not only the Fed, the central banks of Australia and Hong Kong have walked the same path lately. Other banks like BoJ and PBOC have also expressed their intentions to easy policies, should the need be (read: Is This the Right Time to Buy Australia ETFs?).

The ECB and the Bank of England are also expected to take immediate policy action on coronavirus impact. Some market watchers are expecting a 10-bp rate cut in the Euro. The Bank of England (BOE) is scheduled to meet later this month, but analysts at Nomura predict an emergency 25-bp rate cut this week, as quoted on CNBC.

Along with developed economies, emerging markets, as a whole, are better placed now. Emerging markets stocks and currencies gained on Mar 4 on the Fed’s emergency rate cut. A wave of cheap money in global markets should lead to stepped-up economic activities to some extent, although policy easing cannot rule out supply shocks caused by the virus outbreak (read: Emergency Fed Cut Less Effective: ETFs That Should Survive).

Against this backdrop, below we highlight a few global ETFs that should stay strong in the coming days.

iShares MSCI ACWI ETF (ACWI - Free Report)

The underlying MSCI ACWI Index is a free float-adjusted market capitalization index designed to measure the combined equity market performance of developed and emerging markets countries. The United States takes about 56.8% of the fund, followed by Japan (6.88%), China (4.48%) and U.K. (4.47%). The fund yields 2.54% annually. The fund gained 4.1% on Mar 4.

Vanguard Total World Stock ETF (VT - Free Report)

The underlying FTSE Global All Cap Index is a float-adjusted, market-capitalization-weighted index designed to measure the market performance of large, mid and small-capitalization stocks of companies located around the world. The United States takes about 56.1% of the fund, followed by Japan (7.4%), U.K. (4.9%) and China (3.6%). It yields 2.52% annually. The fund added more than 3.3% on Mar 4.

iShares Edge MSCI Min Vol Global ETF (ACWV - Free Report)

The underlying MSCI All Country World Minimum Volatility Index measures the combined performance of equity securities in both emerging and developed markets that have lower absolute volatility. The United States takes about 51.6% of the fund, followed by Japan (11.28%), Switzerland (5.96%) and Canada (4.91%). It yields 2.64% annually. The fund advanced 3% on Mar 4.

iShares Global 100 ETF (IOO - Free Report)

The underlying S&P Global 100 Index is designed to measure the performance of 100 large-capitalization global companies. The United States takes about 67.6% of the fund, followed by U.K. (7.78%), Switzerland (7.12%) and France (4.84%). It yields 2.16% annually. The fund was up 4.1% on Mar 4.

iShares MSCI World ETF (URTH - Free Report)

This global fund has about 63.49% exposure to the United States while Japan (7.69%), United Kingdom (5.08%) and France (3.73%) round out the top four positions. The fund yields 2.34% annually. The fund advanced 3.8% on Mar 4.

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