With coronavirus fears spreading like wildfire, one strategy to implement in an uncertain market laden with volatility is to choose multiple assets. While investors can allocate their capital into various asset classes, another way to get multi-asset exposure is via exchange-traded funds (ETFs).
Now is a better time than ever with losses piling up in the major indexes.
“The fast spread of the virus outside China has unnerved global investors lately,” a Nasdaq report noted. “The S&P 500 lost about $1.737 trillion of its value over the first two days of this week, according to S&P Dow Jones Indices. The equity benchmark shed about $810 billion on Feb 26, adding to its $927-billion loss on Feb 25, according to the firm’s Senior Index Analyst Howard Silverblatt. It’s down $2.138 trillion since last Wednesday’s high, per the source.”
Going with a multi-asset ETF strategy can give investors a smorgasbord of diversification, as well as provide income and limit downside risk. By holding a number of uncorrelated assets, investors can help cushion the impact of a shark market downturn.
Here are a few multi-asset ETFs investors should consider:
- Direxion Flight to Safety Strategy ETF (NSYEArca: FLYT): FLYT aims to deliver a simple, yet robust, approach to portfolio risk mitigation from equity market drawdowns while also providing long-term appreciation potential. By combining long-term U.S. treasury bonds, utility stocks, and gold bullion, the ETF may act as a diversified ballast for portfolios while also acting as a source of uncorrelated returns.
- iShares Core Moderate Allocation ETF (NYSEArca: AOM): the fund seeks to track the investment results of the S&P Target Risk Moderate Index composed of a portfolio of underlying equity and fixed income funds intended to represent a moderate target risk allocation strategy. The fund is a fund of funds and seeks its investment objective by investing primarily in underlying funds that themselves seek investment results corresponding to their own respective underlying indexes. The index measures the performance of the S&P Dow Jones Indices LLC proprietary allocation model.
- iShares Morningstar Multi-Asset Income ETF (BATS: IYLD): the fund seeks to track the investment results of the Morningstar® Multi-Asset High Income IndexSM. The index is broadly diversified and seeks to deliver high current income while maintaining long-term capital appreciation. The fund is a fund-of-funds and invests primarily in the securities of the underlying funds that themselves seek investment results corresponding to their own underlying indexes.
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