The coronavirus crisis shows no signs of dissipating any time soon, with the United States now leading the world in the number of confirmed coronavirus cases. The world’s third most populous nation with 330 million residents, United States has reported at least 85,000 confirmed cases,
leaving behind China and Italy. The number of confirmed cases in the United States have started to rise in other states including Louisiana, Michigan and Texas, with currently New York City area being the epicenter. Moreover, the affected states are struggling with shortages of some important medical equipment and supplies. The death toll in the world’s largest economy due to the coronavirus pandemic has also crossed at least 1200.
The rapid spread of the virus is leading to sweeping travel bans, and cancellation of large events as well as shutting down of schools, colleges, universities, restaurants and bars and shopping malls. In such a scenario, slowing global economic growth looks inevitable. The job market is also expected to be severely hit as Americans are increasingly filing claims for unemployment benefits. Per the latest report released by the Labor Department on Mar 26, U.S. unemployment claims surged to a record 3.28 million
last week (ending Mar 20). The number surpassed the count of 695,000 that was recorded during the financial crisis.
Despite the rising coronavirus cases, the rally in major U.S. indices continued on Mar 26, as investors welcomed the Senate passing the mammoth stimulus bill. However, uncertainty regarding controlling the pandemic remains and the aggravating outbreak has started raising questions on whether the more than $2-trillion stimulus package will be sufficient to combat the pandemic (read:
ETFs to Gain as New US Stimulus Package Gets a Nod).
In such a scenario, JPMorgan
has trimmed its U.S. GDP estimates for the first half of 2020. It now expects the U.S. economy to shrink 10% in first-quarter 2020 in comparison to a 4% contraction estimated previously. Moreover, the GDP for the second quarter is expected to shrink 25% from the 14% projected previously. ETFs to Rescue
Given the situation, let’s take a look at some ETFs that investors can follow for a smooth sail in these turbulent times.
WisdomTree U.S. Quality Dividend Growth Fund ( DGRW Quick Quote DGRW - Free Report)
Notably, in a low-interest rate environment, dividend investing has been the hot spot.
This fund seeks to track the investment results of dividend-paying large-cap companies with growth characteristics in the U.S. equity market. It has an AUM of $2.71 billion and an expense ratio of 28 basis points (read:
ETFs to Mark as Fed's Rate Cut Fails to Cheer Wall Street). SPDR Gold Shares ( GLD Quick Quote GLD - Free Report)
Prices of precious metals like gold flare up during such turbulent market conditions as these are considered safe-haven assets. Per a Bloomberg article, Gold is on track toward its largest weekly advance
GLD is the largest and most popular ETF in the gold space, with an AUM of $50.10 billion. The fund reflects the performance of the price of gold bullion, less the Trust's expenses. At launch, each share of this ETF represented about 1/10th of an ounce of gold. Expense ratio is 0.40% (read:
Economy to be "Awash With Liquidity"? Buy Gold ETFs). iShares Edge MSCI Min Vol USA ETF ( USMV Quick Quote USMV - Free Report)
Low-volatility products could be intriguing choices for those who want to stay invested in equities but like the idea of focusing on minimum volatility. Low-volatility ETFs generally tend to offer positive risk-adjusted gains, though not enormous.
While there are several options, USMV with an AUM of $31.26 billion is the most popular ETF. The fund charges 15 bps in annual fees (read:
Bears Grip Market: 5 Safe ETF Investing Zones). The Consumer Staples Select Sector SPDR Fund ( XLP Quick Quote XLP - Free Report)
This non-cyclical sector is likely to be less hammered by any market crash. The sector can emerge as a true safe haven amid the latest crisis as even people on self-quarantine need daily essentials.
The fund seeks to provide investment results that before expenses, correspond generally to the price and yield performance of the Consumer Staples Select Sector Index. With an AUM of $13.03 billion, XLP has an expense ratio of 13 bps.
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