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5 Multi-Asset ETFs for 2H of 2020

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The first half of 2020 was all about the outbreak of coronavirus in late January and its rapid spread to the various parts of the world by the end of the first quarter. No wonder, Wall Street snapped its longest bull run ever in March and went on to record its worst quarter since fourth-quarter 2008 (read: Top ETF Stories of First Quarter).

However, unprecedented stimulus measures by global central banks and governments pulled the ailing global markets very soon from the nadir. As a result, global stocks rallied in Q2 despite lockdowns and standstill economic activities. Since the market hit lows on Mar 23, the S&P 500 gained roughly 40% till early June, marking the best 50-day rally in history.

However, rising coronavirus cases at the end of the second quarter of 2020 led Wall Street to log its worst dailyand percentage decline in about two weeks for all three stock benchmarks on Jun 24.

What Lies Ahead in 2H?

The second half of 2020 will likely open to the second wave of coronavirus. The easing lockdowns resulted in rise in virus cases in recent weeks. Several U.S. states including Arizona, California, Mississippi, Nevada and Texas reported single-day records on Jun 23. Several other corners of the globe are seeing the same trend.

Meanwhile, the IMF estimates a shrinkage of 4.9% in global GDP in 2020, down from 3% in April. That would mark the worst annual contraction since immediately after World War II. US growth is expected to drop by 8.0%, versus the 5.9% drop anticipated as of April’s forecast.

IMF believes that the recovery is ‘projected to be more gradual than previously forecast.’ Meanwhile, Goldman Sachs expects “the potential risk of a viral ‘second wave’ and the fast-approaching US presidential election will limit a significant increase in equity exposures in the near term.”

Additionally, investors should note that the rally in Q2 was driven by the easy money policies and massive government stimulus. The tailwind is largely priced in now and is likely to wane in the second half. As a result, the markets are moving sideways in last few days and the historic rally is appearing out of gas.

Moreover, President Trump’s decision to suspend H-1B and L-1 work visas is going to affect U.S. tech companies adversely. Plus, the United States is considering $3.1 billion in new tariffs on products from France, Germany, Spain and the UK. The U.S.-China trade relation is also anything but smooth. Such factors may bother market momentum at times in the second half especially with election in November.

Should You Diversify Through Multi-Asset ETFs?

Investors will definitely want to know about ways that could save them in case of a widespread market selloff and rising volatility. In this regard, we highlight a few multi-asset ETFs that could offer investors great returns in the form of capital appreciation and income.     

Notably, the multi-asset strategy looks to boost returns and lower overall volatility in portfolios. These products normally provide a high level of current income and take care of downside risks of a specific asset class. These also cater to various asset classes (equity, fixed income and alternative securities), which have low correlation to each other.

Below we highlight a few multi-asset ETFs that could offer investors great returns in the form of income (as all offer benchmark-beating yields) as well as provide diversification. Notably, yield on the 10-year U.S. Treasuries was 0.69% on Jun 24, 2020.

Amplify BlackSwan Growth & Treasury Core ETF (SWAN - Free Report)

The underlying S-Network BlackSwan Core Total Return Index seeks uncapped exposure to the S&P 500, while buffering against the possibility of significant losses. It charges 49 bps in fees and yields 3.05% annually (read: 3 Safe ETFs for Volatile Markets).

iShares Core Conservative Allocation ETF (AOK - Free Report)

The underlying S&P Target Risk Conservative Index seeks to measure the performance of an asset allocation strategy targeted to a conservative risk profile. It charges 25 bps in fees and yields 2.54% annually (read: Virus Erases $1.7T From Wall Street: Play Multi-Asset ETFs).

Gadsden Dynamic Multi-Asset ETF (GDMA - Free Report)

This ETF is active and does not track a benchmark. The fund is actively-managed & seeks to achieve its investment objective by investing app. 80% of its total assets with exposure to a variety of asset classes, geographies & market capitalizations based on a long-term view of macroeconomic factors & app. 20% of its total assets to add or reduce exposure to one or more asset classes based on a short-term view of market. It charges 77 bps in fees and yields 1.67% annually.

Amplify High Income ETF (YYY - Free Report)

The underlying ISE High Income Index is comprised of 30 closed-end funds ranked highest overall by the ISE in three criteria: fund yield, discount to net asset value and liquidity. The expense ratio of the fund is 2.17% while it yields a massive 10.17% annually.

Invesco Conservative Multi-Asset Allocation ETF (PSMC - Free Report)

This ETF is active. The fund is an actively managed exchange-traded fund that seeks total returns consistent with lower risk relative to the broad market by allocating through a conservative investment style that seeks to maximize diversification potential. It charges 39 bps in fees and yields 6.20% annually.

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