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The 7 Best ETFs for Bear Markets & Recessions (Defensive) in 2021

Bear markets, recessions, and market downturns are largely unpredictable by their very nature. Here we’ll look at the best defensive ETFs to weather the storms and survive or even thrive during periods of market turmoil in 2021.

Disclosure:  Some of the links on this page are referral links. At no additional cost to you, if you choose to make a purchase or sign up for a service after clicking through those links, I may receive a small commission. This allows me to continue producing high-quality, ad-free content on this site and pays for the occasional cup of coffee. I have first-hand experience with every product or service I recommend, and I recommend them because I genuinely believe they are useful, not because of the commission I get if you decide to purchase through my links. Read more here.

Introduction – Being Defensive During Bear Markets

Attempting to time the market – predicting bear markets and recessions – is usually more harmful than helpful. What we can do, however, is prepare ahead of time by assembling a diversified, defensive portfolio of different assets, geographies, and equity styles.

The key to portfolio diversification is in holding uncorrelated assets. For example, when stocks go down, bonds tend to go up. Diversification seems to be the only free lunch in the market in that sense. Diversification is particularly important for investors with a short time horizon or low risk tolerance.

Warren Buffett’s #1 rule is “Never lose money.” Mitigating drawdowns preserves capital. Black swan events and even extended bear markets and recessions are largely unpredictable, but there’s no reason to simply withdraw to cash out of fear. The defensive ETFs below help increase portfolio diversification and provide downside protection so that risk-averse investors can have peace of mind during periods of market turmoil.

Historically, there have been specific defensive asset types and sectors that are more resilient to bear markets and recessions, some of which are colloquially referred to as “crash-proof.”

Below we’ll explore the best defensive ETFs to capture these assets.

The 7 Best ETFs for Bear Markets and Recessions

Below are the 7 best defensive ETFs to stave off drawdowns.

FUTY – Fidelity MSCI Utilities Index ETF

Demand for utilities like water and electricity stays relatively constant during recessions and bear markets. These services are usually the last expense consumers cut. Consequently, utilities rarely experience drops in revenues, and are thus considered defensive stocks. The sector is also popular for providing consistent and high dividends.

The Fidelity MSCI Utilities Index ETF (FUTY) seeks to track the MSCI USA IMI Utilities Index and has an expense ratio of 0.08%.

VDC – Vanguard Consumer Staples ETF

Similarly, demand for consumer staples – everyday products that people need like dish soap, deodorant, toothpaste, food, beverages, etc. – is non-cyclical and doesn’t change much during economic downturns, as consumers are unwilling or unable to stop buying these products. Thus, consumer staples stocks like Johnson & Johnson and Procter & Gamble tend to weather storms well and are considered to be “defensive” stocks. These stocks also usually maintain a consistent dividend payment during recessions and bear markets. Like utilities, consumer staples have the added benefit of being lowly correlated with the broader market.

The Vanguard Consumer Staples ETF (VDC) has over $6 billion in assets and over 90 holdings across the U.S. consumer staples sector. The fund seeks to track the MSCI US Investable Market Consumer Staples 25/50 Index and has an expense ratio of 0.10%.

VGIT – SPDR S&P Dividend ETF

Treasury bonds offer the lowest correlation to stocks of any asset type, and are considered a flight to safety asset since they’re backed by the U.S. government. Treasury bonds are the go-to diversifier to add downside protection and volatility reduction in a diversified investment portfolio alongside stocks. The popular 60/40 Portfolio shows how well this relationship has worked for decades. When stocks go down, bonds tend to go up. This relationship is conveniently amplified during market downturns and periods of high volatility, during which investors usually flock to treasury bonds for safety.

The Vanguard Intermediate-Term Treasury ETF (VGIT) roughly matches the average maturity of the total U.S. treasury bond market, and is a one-size-fits-all bond duration between short and long, suitable for any investor. This ETF has over $10 billion in assets and a low expense ratio of only 0.05%.

SGOL – Aberdeen Standard Physical Gold Shares ETF

Commodities are also considered a safe asset during market turmoil, the most popular of which is gold. The shiny metal acts as a store of value and performs well when the value of fiat currency is on the decline. Uncertainty in the market and/or falling stocks usually have investors running to gold, at least for a small part of their portfolios. Gold has a special diversification benefit of being uncorrelated to both stocks and bonds.

The Aberdeen Standard Physical Gold Shares ETF (SGOL) is physically backed by gold bullion. This ETF tracks the spot price of gold bullion and is the most affordable gold fund out there with an expense ratio of 0.17%.

VIG – Vanguard Dividend Appreciation ETF

Dividend investors will likely already be familiar with this fund. The Vanguard Dividend Appreciation ETF (VIG) seeks to track the NASDAQ US Dividend Achievers Select Index (formerly known as the Dividend Achievers Select Index). These are stocks with a history of at least 10 consecutive years of an increasing dividend payment. That usually means large, stable, safe, cash-healthy companies that are more resilient during bear markets.

These companies also tend to exhibit lower volatility than the broader market. While the yield per se may not be impressive to income investors, these high-quality companies offer the potential for growth and a growing dividend payment. This ETF has an expense ratio of 0.06%.

USMV – iShares Edge MSCI Min Vol USA ETF

Speaking of low volatility, we can specifically target that factor with a popular fund from iShares: the iShares Edge MSCI Min Vol USA ETF (USMV). Funds like this allow investors to stay in stocks while reducing portfolio risk and minimizing drawdowns during bear markets and recessions. This fund finds stocks in the market that exhibit low volatility, ranks them, and then also looks at their expected future volatility before deciding whether or not they make the cut.

This ETF has over $34 billion in assets and an expense ratio of 0.15%.

SH – ProShares Short S&P 500

True bears may simply prefer to directly “short,” or bet against, the market. This can be done with inverse ETFs. These products use swaps and debt to provide the opposite return of the underlying index. In this case, if the index drops by $1, your position increases by $1.

The ProShares Short S&P 500 (SH) provides the inverse return of the S&P 500 Index. The fund has nearly $3 billion in assets and an expense ratio of 0.89%.

Where To Buy These Defensive ETFs for Bear Markets

All these defensive ETFs should be available at any major broker. My choice is M1 Finance. M1 has zero trade commissions and zero account fees, and offers fractional shares, dynamic rebalancing, intuitive pie visualization, and a sleek, user-friendly interface and mobile app. I wrote a comprehensive review of M1 Finance here.


Interested in more Lazy Portfolios? See the full list here.

Disclaimer:  While I love diving into investing-related data and playing around with backtests, I am in no way a certified expert. I have no formal financial education. I am not a financial advisor, portfolio manager, or accountant. This is not financial advice, investing advice, or tax advice. The information on this website is for informational and recreational purposes only. Investment products discussed (ETFs, mutual funds, etc.) are for illustrative purposes only. It is not a recommendation to buy, sell, or otherwise transact in any of the products mentioned. Do your own due diligence. Past performance does not guarantee future returns. Read my lengthier disclaimer here.

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Sours: https://www.optimizedportfolio.com/best-etfs-for-bear-markets/

The 4 Best ETFs to Buy During a Stock Market Crash

This has been a year that the investment community will remember for a long time. Aside from dealing with the unprecedented coronavirus disease 2019 (COVID-19) pandemic, Wall Street and investors have contended with the steepest bear market plunge of all time and the quickest rally to new highs from a bear market low in history. In fact, the CBOE Volatility Index, which measures expected volatility in S&P 500(SNPINDEX:^GSPC) options over the next 30 days, hit its highest level ever in March.

Volatility can be exceptionally scary in the short term, but it historically opens the door for long-term investors to buy great companies at substantial discounts.

Of course, not every investor has the stomach to buy individual stocks, or the time necessary for research. That's where exchange-traded funds (ETFs) come in. An ETF is a security that usually holds a basket of stocks with a certain focus. For instance, if you want to invest in large-cap stocks, consumer staples, or the Brazilian economy, there are ETFs that cater to those desires.

Three golden eggs placed in a basket lined with dollar bills.

Image source: Getty Images.

Given the diversification and breadth that often come with owning ETFs, they can make for smart buys if and when the stock market crashes. Should that come to pass -- remember that the Nasdaq Composite recently fell 10% in three trading sessions -- investors should consider buying these top-tier ETFs.

Vanguard S&P 500 ETF

Although it's about as far from innovative as you can get, the Vanguard S&P 500 ETF(NYSEMKT:VOO) is going to get the job done for patient investors over the long run.

As its name implies, this ETF attempts to closely mirror the performance of the benchmark S&P 500. It does so with a net expense ratio of just 0.03%. For a mere fraction of your investment, you can get instant diversification from the 500 companies that comprise the broad-based index.

But why track the S&P 500? The simple answer is that you'll never be wrong, as long as time is on your side. The S&P 500 has undergone 38 corrections of at least 10% since 1950, and it's eventually put each and every one of these drops firmly into the rearview mirror. Since operating earnings tend to expand over time, we should expect the major U.S. indexes, like the S&P 500, to gain value.

Best of all, the Vanguard S&P 500 ETF is currently yielding almost 1.9%, meaning these payouts will more than offset the microscopic management expenses associated with this ETF.

A closeup of a gold bar.

Image source: Getty Images.

VanEck Vectors Gold Miners ETF

If hedging during a market meltdown is more your thing, consider putting your money to work in the VanEck Vectors Gold Miners ETF(NYSEMKT:GDX).

In my 21 years of investing in the stock market, I've never seen so many catalysts in the sails of gold and gold stocks. We've seen global bond yields plunge. The Federal Reserve had to reassure domestic financial markets that it would keep its benchmark federal funds rate at record-low levels for years to come. The central bank is rapidly expanding the money supply as it unleashes unlimited quantitative easing on the markets. All of these factors imply a weaker U.S. dollar and a much higher gold price.

As for gold mining stocks, many have spent the past five years reducing their net debt, expanding their most efficient or highest-ore-grade mines, and lowering their all-in sustaining costs. In many instances, gold mining stocks have cash operating margins at or above $1,000 per ounce. You could rightly say that the golden age is upon the industry.

Buying the VanEck Vectors Gold Miners ETF will give you exposure to the biggest players producing the lustrous yellow metal, and the 0.53% expense ratio associated with the ETF is almost perfectly offset by the current 0.52% annual yield.

A cloud in the middle of a data center that's connected to multiple wireless devices.

Image source: Getty Images.

Global X Cloud Computing ETF

Though high-growth stocks often get throttled during stock market crashes, investors would be wise not to overlook growth trends during a downturn. That's why the Global X Cloud Computing ETF(NASDAQ:CLOU) could be very appealing during a crash.

It's no secret that the coronavirus pandemic has completely upended the traditional office, forcing many employees to work remotely. This means more emphasis on shared data outside the workplace. But the thing to realize here is that this trend was ongoing well before the COVID-19 outbreak. Cloud stocks were growing by double-digit percentages across the board; now they're just growing even faster.

For investors who lack the ability to really dig into the technical differences between cloud companies, but who nevertheless want access to this exceptionally high-growth space, the Global X Cloud Computing ETF is the perfect solution. You'll pay a reasonably high net expense ratio of 0.68%, but you'll gain exposure to three dozen of the hottest cloud-based businesses on the planet, including Zoom Video Communications, Shopify, Twilio, and salesforce.com, to name a few. 

A businessman placing crisp one hundred dollar bills into two outstretched hands.

Image source: Getty Images.

Legg Mason Low Volatility High Dividend ETF

Finally, investors who want to avoid volatility as much as possible but still want exposure to stocks should consider buying the Legg Mason Low Volatility High Dividend ETF(NASDAQ:LVHD). That gigantic mouthful simply means this fund buys mature, time-tested companies that pay an above-average yield.

Although the Legg Mason Low Volatility High Dividend ETF has underperformed the broader market in 2020, it's important to understand just how powerful dividend stocks can be. A 2013 report from Bank of America/Merrill Lynch found that public companies initiating and growing a dividend between 1972 and 2012 delivered a compound annual return of 9.5%. By comparison, stocks that didn't pay dividends generated an average annual return of just 1.6% over this same 40-year span. In the aggregate, dividend stocks performed approximately 19 times better than non-dividend stocks between 1972 and 2012.

As of the end of July, the Legg Mason Low Volatility High Dividend ETF had nearly half of its money invested in the trio of utilities, real estate, and consumer staples, with 52% of assets invested in companies with a market cap of at least $25 billion. These might be boring businesses, but boring's just fine considering that many provide necessary goods or services. 

With the Legg Mason Low Volatility High Dividend ETF, you can expect an annual net expense ratio of 0.27%, but a current yield of more than 3%.

Sours: https://www.fool.com/investing/2020/09/12/the-4-best-etfs-to-buy-during-a-stock-market-crash/
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Best inverse and short ETFs — here’s what to know before buying them

Inverse exchange-traded funds (ETFs) are often used by contrarian traders looking to profit from the decline in value of an asset class, such as an index. These risky investments, also known as short ETFs, can be valuable for seasoned market pros as increased volatility provides short-term opportunities to get in and out of positions. However, while these investments can potentially be lucrative, they are definitely not for everyone.

Depending on your financial situation and risk tolerance there are various strategies for trading inverse ETFs. For example, some traders use short ETFs to hedge against falling prices in other positions. So, as one position drops, the other one rises, capping the potential losses.

Investors should note that inverse short ETFs reset daily. So, holding them for longer than a day could compound the potential losses.

Your level of financial knowledge and engagement with your investments are important factors to consider carefully. Even experienced traders often start small and have an exit strategy. The key is to stick to your plan and know when to close out of a losing position.

Below we highlight some of the most popular short ETFs, explain the concept of short selling and leveraged trading, and discuss some key considerations to keep in mind if you’re thinking about buying an inverse ETF.

Top inverse ETFs

The following inverse ETFs, also known as short ETFs, are some of the most widely traded.

ProShares UltraPro Short QQQ (SQQQ)

SQQQ offers three times daily downside leveraged exposure to the tech-heavy Nasdaq 100 index. This ETF is designed for traders with a bearish short-term view on large-cap technology names.

Fund issuer: ProShares

Expense ratio: 0.95 percent

Average daily volume: ~70 million shares

Assets under management: ~$1.75 billion

ProShares Short Ultrashort S&P500 (SDS)

SDS offers twice-daily leveraged downside exposure to the S&P 500 index. This ETF is designed for traders with a bearish short-term view on large-cap U.S. companies across sectors.

Fund issuer: ProShares

Expense ratio: 0.91 percent

Average daily volume: ~16 million shares

Assets under management: ~$609 million

Direxion Daily Semiconductor Bear 3x Shares (SOXS)

SOXS provides three times daily leveraged downside exposure to an index of companies involved in developing and manufacturing semiconductors. This ETF is designed for traders with a bearish short-term outlook on the semiconductor industry.

Fund issuer: Rafferty Asset Management

Expense ratio: 1.11 percent

Average daily volume: ~8.2 million shares

Assets under management: ~$126 million

Direxion Daily Small Cap Bear 3X Shares (TZA)

TZA provides three times daily leveraged downside exposure to the small-cap Russell 2000 index. This ETF is designed for traders with a bearish short-term outlook on the US economy.

Fund issuer: Rafferty Asset Management

Expense ratio: 1.10 percent

Average daily volume: ~8.2 million shares

Assets under management: ~$357 million

ProShares UltraShort 20+ Year Treasury (TBT)

TBT offers twice-daily leveraged downside exposure to the Barclays Capital U.S. 20+ Year Treasury Index. This ETF is designed for traders who want to make a leveraged bet on rising interest rates.

Fund issuer: ProShares

Expense ratio: 0.92 percent

Average daily volume: ~3.9 million shares

Assets under management: ~$1.5 billion

What is short selling?

Short selling is an investment strategy used by traders to speculate on the price decline of an asset.

In short selling, traders borrow an asset so they can sell it to other market participants. The objective is to buy back the asset at a lower price, return it to the original lender, and pocket the difference. However, when the asset price increases, traders are on the hook to buy it back at a higher price.

Short selling is a risky strategy because the price of an asset can essentially rise to infinity.

For example, if you buy a company’s stock for $10 and the company declares bankruptcy, your potential loss is $10. However, if you short the same stock, and the company gets acquired, causing the shares to jump to $300, your potential loss is exponentially bigger as you are obligated to buy back the stock and return it to the lender.

The concept of short selling gained notoriety earlier this year when shares of GameStop (GME) jumped from around $40 to nearly $400 in a few days as short sellers were forced out of their positions.

What is leveraged short selling?

Leveraged short-selling lets traders use debt to increase their buying power. With the additional funds, traders often purchase futures and other financial derivatives to speculate on the stock or bond markets.

By taking additional risk, traders seek to capture outsized returns.

Leveraged trading is also known as margin trading. The strategy can be risky because those bets often become outsized losses when a trade goes sour. Plus, traders need to pay back the borrowed funds along with any transaction fees.

Apart from these factors, traders have to pay short-term capital gains taxes, primarily if the assets are in a taxable account. In addition, multiple fees are associated with trading on margin and short selling.

How traders use leveraged short ETFs

With leveraged short ETFs, traders aim to magnify investment returns. Think of leveraged ETFs as ETFs on steroids.

For example, the ProShares UltraPro Short QQQ ETF (SQQQ) uses swaps and futures to provide three times the inverse daily performance of the Nasdaq 100 index. So, conceptually, if the Nasdaq 100 is down 1 percent, this short ETF could be up 3 percent. It all depends on the type of leverage used and how it connects to the news causing the move.

While that might sound tempting, potential losses can be just as pronounced. Financial derivatives, like other exotic market products, react differently to negative news. Using the hypothetical example above, when the Nasdaq jumps 2 percent, a leveraged short ETF could plunge around 6 percent, depending on the underlying assets used.

How to buy inverse/short ETFs

There are plenty of ETF screening tools, including those provided by most brokerage firms. While factors like management fees and daily trading performance are important considerations, you should thoroughly review the fund’s prospectus.

As you narrow your options, the key features to consider are:

Leverage: This metric is qualified by a numeral followed by the letter “x.” So, a fund like the Direxion Daily S&P 500 Bull 3X Shares (SPXL) offers three times the performance of the S&P 500 index. In addition, the leveraged expected return is for a single day, not cumulative over time.

Expense ratios and fees: Compared to traditional funds, short ETFs carry higher fees. Keep in mind that those costs can add up, so make sure to compare apples to apples and read the fine print.

Trading volume: The more liquid a fund is, the easier it will be to buy and sell. Look at how average trading volume compares to similar ETFs.

Fund performance: Numbers don’t lie. While doing your research, take a look at a fund’s daily performance. But remember, these funds are not intended as a buy-and-hold strategy.

Assets under management (AUM): Many investors use this figure as a vote of confidence to assess other investors’ engagement with a particular ETF. Along with AUM figures, it might be helpful to check the longevity of the fund.

Fund issuer: Brands are powerful. And that’s no different in the ETF space. Some investors feel comfortable investing only with large asset managers, while others see the value in newcomers. Decide what works for you and your financial needs.

Use these criteria as a starting point to do more research. For example, some traders find it helpful to study the daily performance of inverse/short ETFs before committing any money.

Learn more:

Editorial Disclaimer: All investors are advised to conduct their own independent research into investment strategies before making an investment decision. In addition, investors are advised that past investment product performance is no guarantee of future price appreciation.

Sours: https://www.bankrate.com/investing/best-inverse-etfs/
Should You Buy Index Funds at All-Time Highs? - Jack Bogle Explains

The 12 Best ETFs to Battle a Bear Market

Investors worried about the next market downturn can find plenty of protection among exchange-traded funds (ETFs). Individual stocks can carry a lot of risk, while mutual funds don't have quite the breadth of tactical options. But if you browse through some of the best ETFs geared toward staving off a bear market, you can find several options that fit your investing style and risk profile.

Entering 2020, Wall Street keyed in on a multitude of risks: the outcome of the Democratic primaries and the November presidential election; where U.S.-China trade relations would head next; and slowing global growth, among others.

But Collaborative Fund's Morgan Housel hit it on the nose early this year in a must-read post about risk: "The biggest economic risk is what no one's talking about, because if no one's talking about (it) no one's prepared for it, and if no one's prepared for it its damage will be amplified when it arrives."

Enter the COVID-19 coronavirus. This virus, which has a fatality rate of about 2% and appears highly contagious, has afflicted more than 80,000 people worldwide in two months, claiming 2,700 lives. Those numbers almost assuredly will grow. The Centers for Disease Control and Prevention have already warned that they believe an expanded U.S. outbreak is not a question of "if," but "when." U.S. multinationals have already projected weakness due to both lower demand and affected supply chains, and the International Monetary Fund is already lowering global growth projections.

Whether a bear market is coming remains to be seen. But investors clearly are at least rattled by the prospects; the S&P 500 has dropped more than 7% in just a few days. If you're inclined to protect yourself from additional downside – now, or at any point in the future – you have plenty of tools at your disposal.

Here are a dozen of the best ETFs to beat back a prolonged downturn. These ETFs span a number of tactics, from low volatility to bonds to commodities and more. All of them have outperformed the S&P 500 during the initial market panic, including some that have produced significant gains.

Data is as of Feb. 25. Dividend yields represent the trailing 12-month yield, which is a standard measure for equity funds.

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iShares Edge MSCI Min Vol USA ETF

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  • Type: Low-volatility stock
  • Market value: $38.5 billion
  • Dividend yield: 1.8%
  • Expenses: 0.15%, or $15 annually on a $10,000 investment
  • Return since Feb. 19: -5.0% (versus -7.2% for the S&P 500)

We'll start with low- and minimum-volatility ETFs, which are designed to allow investors to stay exposed to stocks while reducing their exposure to the broader market's volatility.

The iShares Edge MSCI Min Vol USA ETF (USMV, $66.15) is one of the best ETFs for the job, and it's the largest such fund at nearly $39 billion in assets. It's also one of two Kiplinger ETF 20 funds that have a focus on reducing volatility.

So, how does USMV do it?

The fund starts with the top 85% (by market value) of U.S. stocks that have lower volatility compared to the rest of the market. It then weights the stocks using a multi-factor risk model. It goes through another level of refining via an "optimization tool" that looks at the projected riskiness of securities within the index.

The result, at the moment, is a portfolio of more than 200 stocks with an overall beta of 0.65. Beta is a gauge of volatility in which any score below 1 means it's less volatile than a particular benchmark. USMV's beta, then, indicates it's significantly less volatile than the S&P 500.

The iShares Edge MSCI Min Vol USA is pretty balanced by sector, but heaviest in information technology (17.7%), financials (16.0%) and consumer staples (12.1%). That won't always be the case, as the portfolio does fluctuate – health care (10.6%), for instance, represented roughly 15% of USMV's assets more than a year ago.

When considering any low- or minimum-vol product, know that the trade-off for lower volatility might be inferior returns during longer rallies. That said, USMV has been a champ. Even prior to the recent market downturn, through Feb. 18, USMV had outperformed the S&P 500 on a total-return basis (price plus dividends), 85.1%-77.8%.

Learn more about USMV at the iShares provider site.

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Legg Mason Low Volatility High Dividend ETF

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  • Type: Low-volatility dividend stock
  • Market value: $861.1 million
  • Dividend yield: 3.3%
  • Expenses: 0.27%
  • Return since Feb. 19: -4.3%

Low-volatility and minimum-volatility products aren't quite the same things. Min-vol ETFs try to minimize volatility within a particular strategy, and as a result, you can still end up with some higher-volatility stocks. Low-vol ETFs, however, insist on low volatility period.

The Legg Mason Low Volatility High Dividend ETF (LVHD, $32.97) invests in roughly 50 to 100 stocks selected because of their lower volatility, as well as their ability to generate income.

LVHD starts with a universe of the 3,000 largest U.S. stocks – with a universe that large, it ends up including mid- and small-cap stocks, too. It then screens for profitable companies that can pay "relatively high sustainable dividend yields." It then scores those stocks higher or lower based on price and earnings volatility. Every quarter, when the fund rebalances, no stock can account for more than 2.5% of the fund, and no sector can account for more than 25%, except real estate investment trusts (REITs), which are capped at 15%.

Right now, LVHD's top three sectors are the three sectors many investors think of when they think of defense: utilities (27.8%), real estate (16.6%) and consumer staples (14.3%). They're perfectly reflected by the fund's top three holdings: utility American Electric Power (AEP, 2.9%), telecom infrastructure REIT Crown Castle International (CCI, 2.8%) and PepsiCo (PEP, 2.7%).

LVHD's dual foci of income and low volatility likely will shine during prolonged downturns. The flip side? It tends to get left behind once the bulls pick up steam.

Learn more about LVHD at the Legg Mason provider site.

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iShares Edge MSCI Min Vol USA Small-Cap ETF

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  • Type: Low-volatility small-cap stock
  • Market value: $572.5 million
  • Dividend yield: 1.9%
  • Expenses: 0.20%
  • Return since Feb. 19: -4.4%

Small-cap stocks simply haven't been "acting right" for some time. Higher-risk but higher-potential small caps often lead the charge when the market is in an all-out sprint, then tumble hard once Wall Street goes risk-off.

But the Russell 2000 small-cap index has significantly lagged for some time, up roughly 7% during the 52-week period ended Feb. 18, while the S&P 500 has shot 21% higher. And it has performed slightly better across the short selloff. Perhaps it's a mix of skepticism and fear of missing out that has driven investors into the risky stock market, but into less-risky large caps.

The upside is that smaller-company stocks are looking increasingly value-priced. But if you're concerned about investing in small caps in this environment, you can find more stability via the iShares Edge MSCI Min Vol USA Small-Cap ETF (SMMV, $34.64) – a sister ETF of the USMV.

The SMMV is made up of roughly 390 stocks, with no stock currently accounting for any more than 1.43% of the fund's assets. Top holdings at the moment include Royal Gold (RGLD), which holds precious-metals royalty interests; mortgage REIT Blackstone Mortgage Trust REIT (BXMT); and Wonder Bread and Tastykake parent Flowers Foods (FLO).

This ETF boasts a beta of just 0.68, compared to the market's 1 and the broader Russell 2000's beta of 1.19. It also boasts a slightly higher dividend yield (1.9%) than the S&P 500 (1.8%) at the moment.

Learn more about SMMV at the iShares provider site.

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Reality Shares DIVCON Dividend Defender ETF

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  • Type: Long-short dividend stock
  • Market value: $7.2 million
  • Dividend yield: 0.8%
  • Expenses: 1.38%
  • Return since Feb. 19: -2.4%

A few other funds take a different approach to generating more stable returns.

The Reality Shares DIVCON Dividend Defender ETF (DFND, $32.37) is a "long-short" stock ETF that revolves around the DIVCON dividend rating system.

DIVCON looks at all the dividend payers among Wall Street's 1,200 largest stocks, and examines their profit growth, free cash flow (how much cash companies have left over after they meet all their obligations) and other financial metrics that speak to the health of their dividends. It then rates each stock based on a five-tier rating system in which DIVCON 1 means the company is at high risk for a dividend cut, and DIVCON 5 means the company is very likely to grow its dividends in the future.

The DFND ETF's portfolio is effectively 75% long these companies that have the best dividend health ("Leaders") while going 25% short those with lousy dividend health ("Laggards").

The theory? In times of market volatility, investors will huddle into DFND's high-quality long holdings and sell out of the stocks that DIVCON's system is warning about. And indeed, DIVCON's Leaders outperformed the S&P 500 on a total return basis, 10.5% to 6.9%, between Dec. 29, 2000 and Dec. 31, 2019. Laggards greatly underperformed with 3.7% returns.

Right now, the fund is most heavily invested in industrials (20.5%), information technology (15.8%) and health care (14.1%). Top holdings include the likes of Domino's Pizza (DPZ) – one of the best stocks of the 2010s – and Cintas (CTAS). Its biggest short positions are copper mining giant Freeport-McMoRan (FCX) and data-storage tech stock Western Digital (WDC).

Reality Shares DIVCON Dividend Defender ETF might be the most complex option among these best ETFs for a bear market, but it has delivered in good times and bad. DFND has slightly beat out the S&P 500 over the past year, and it has been roughly half as volatile while doing so.

Learn more about DFND at the Reality Shares provider site.

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iShares Cohen & Steers REIT ETF

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  • Type: Sector (Real estate)
  • Market value: $2.4 billion
  • Dividend yield: 2.5%
  • Expenses: 0.34%
  • Return since Feb. 19: -3.6%

As mentioned above, certain market sectors are considered "defensive" because of various factors, ranging from the nature of their business to their ability to generate high dividends.

Real estate is one such sector. REITs were actually created by Congress roughly 60 years ago to enable mom 'n' pop investors to invest in real estate, since not everyone can scrounge together a few million bucks to buy an office building. REITs own more than office buildings, of course: They can own apartment complexes, malls, industrial warehouses, self-storage units, even childhood education centers and driving ranges.

REITs' defensive allure is tied to their dividends. These companies are exempt from federal taxes … as long as they pay out at least 90% of their taxable income as dividends to shareholders. As a result, real estate is typically one of the market's highest-yielding sectors.

The iShares Cohen & Steers REIT ETF (ICF, $121.22) tracks an index built by Cohen & Steers, which calls itself "the world's first investment manager dedicated to real estate securities." The portfolio itself is a fairly concentrated group of 30 larger REITs that dominate their respective property sectors.

Equinix (EQIX, 8.2%), for instance, is the market leader in global colocation data centers. American Tower (AMT, 8.2%) is a leader in telecom infrastructure, which it leases out to the likes of Verizon (VZ) and AT&T (T). And Prologis (PLD, 7.8%) owns 964 million square feet of logistics-focused real estate (such as warehouses) and counts Amazon.com (AMZN), FedEx (FDX) and the U.S. Postal Service among its customers.

REITs are far from completely coronavirus-proof, of course. Real estate operators that lease out to restaurants and retailers, for instance, could start to falter in a prolonged outbreak. Nonetheless, ICF still might provide safety in the short term, and its dividends will counterbalance some weakness.

Learn more about ICF at the iShares provider site.

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Vanguard Utilities ETF

utility lines
  • Type: Sector (Utilities)
  • Market value: $4.8 billion
  • Dividend yield: 2.7%
  • Expenses: 0.10%
  • Return since Feb. 19: -4.2%

No market sector says "safety" more than utilities. Scared about the economy? Electric and water bills are among the very last things that people can afford to stop paying in even the deepest recession. Just looking for income to smooth out returns during a volatile patch? The steady business of delivering power, gas and water produces equally consistent and often high dividends.

The Vanguard Utilities ETF (VPU, $149.62) is one of the best ETFs for accessing this part of the market – and, at 0.10% in annual expenses, it's one of the cheapest.

VPU holds just shy of 70 companies, such as NextEra Energy (NEE, 11.9%) and Duke Energy (DUK, 6.6%), that generate electricity, gas, water and other utility services that you and I really can't live without, no matter how the stock market and economy are doing. This isn't really a high-growth industry, given that utility companies typically are locked into whatever geographies they serve, and given that they can't just send rates through the ceiling whenever they want.

But utilities typically are allowed to raise their rates a little bit every year or two, which helps to slowly grow their profits and add more ammo to their regular dividends. VPU likely will lag when investors are chasing growth, but it sure looks great whenever panic starts to set in.

Learn more about VPU at the Vanguard provider site.

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Consumer Staples Select Sector SPDR Fund

grocery store
  • Type: Sector (Consumer staples)
  • Market value: $13.9 billion
  • Dividend yield: 2.6%
  • Expenses: 0.13%
  • Return since Feb. 19: -3.9%

You need more than just water, gas and electricity to get by, of course. You also need food to eat and – especially amid a viral outbreak – basic hygiene products.

That's what consumer staples are: the staples of everyday life. Some are what you'd think (bread, milk, toilet paper, toothbrushes), but staples also can include products such as tobacco and alcohol – which people treat like needs, even if they're not.

Like utilities, consumer staples tend to have fairly predictable revenues, and they pay decent dividends. The Consumer Staples Select Sector SPDR Fund (XLP, $62.02) invests in the 30-plus consumer staples stocks of the S&P 500 – a who's who of the household brands you've grown up with and know. It holds a significant chunk of Procter & Gamble (PG, 16.0%), which makes Bounty paper towels, Charmin toilet paper and Dawn dish soap. Coca-Cola (KO) and PepsiCo (PEP) – the latter of which also boasts Frito-Lay, a massive snacks division – combine to make up another 20% of assets.

XLP also holds a few retail outfits, such as Walmart (WMT) and Costco (COST), where people typically go to purchase these goods.

The Consumer Staples SPDR has long been among the best ETFs to buy, from a sector standpoint, during corrections and bear markets. For instance, during 2007-09, while the S&P 500 was shedding more than 55%, the XLP only lost half as much, -28.5%. And in 2015, the XLP outperformed the S&P 500 7% to 1.3%. An above-average yield of 2.6% is partly responsible for that outperformance.

Learn more about XLP at the SPDR provider site

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Vanguard Short-Term Bond ETF

bonds
  • Type: Short-term bond
  • Market value: $22.2 billion
  • SEC yield: 1.5%*
  • Expenses: 0.07%
  • Return since Feb. 19: +0.5%

Much of the recent flight to safety has been into bonds. Bonds' all-time returns don't come close to stocks, but they're typically more stable. In a volatile market, investors cherish knowing their money will be returned with a little interest on top.

The Vanguard Short-Term Bond ETF (BSV, $81.52) is a dirt-cheap index ETF that gets you exposure to an enormous world of nearly 2,500 short-term bonds with maturities of between one and five years.

Why short-term? The less time a bond has remaining before it matures, the likelier it is that the bond will be repaid – thus, it's less risky. Also, the value of the bonds themselves tend to be much more stable than stocks. The trade-off, of course, is that these bonds don't yield much. Indeed, the BSV's 1.5% yield is less than what the S&P 500 at the moment.

But that's the price you pay for safety. In addition to a short-term bent, BSV also invests only in investment-grade debt, further tamping down on risk. Roughly two-thirds of the fund is invested in U.S. Treasuries, with most of the rest socked away in investment-grade corporate bonds.

Stability works both ways. BSV doesn't move much, in bull and bear markets. Even with the recent drop, the S&P 500's 14% gain over the past year dwarfs the BSV's 5.6% advance. But Vanguard's bond ETF likely would close that gap if the market continues to sell off.

Learn more about BSV at the Vanguard provider site.

* SEC yield reflects the interest earned for the most recent 30-day period after deducting fund expenses. SEC yield is a standard measure for bond funds.

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SPDR DoubleLine Total Return Tactical ETF

concept art
  • Type: Intermediate-term bond
  • Market value: $3.4 billion
  • SEC yield: 2.6%
  • Expenses: 0.65%
  • Return since Feb. 19: +0.7%

The actively managed SPDR DoubleLine Total Return Tactical ETF (TOTL, $49.77), a Kip ETF 20 component, is another bond-market option.

The downside of active management is typically higher fees than index funds with similar strategies. But if you have the right kind of management, they'll often justify the cost. Better still, TOTL is, as it says, a "total return" option, meaning it's happy to chase down different opportunities as management sees fit – so it might resemble one bond index fund today, and a different one a year from now.

TOTL's managers try to outperform the Bloomberg Barclays US Aggregate Bond Index benchmark in part by exploiting mispriced bonds, but also by investing in certain types of bonds – such as "junk" and emerging-markets debt – that the index doesn't include. The 1,010-bond portfolio currently is heaviest in mortgage-backed securities (54.1%), followed by U.S. Treasuries (25.3%) and emerging-market sovereign debt (8.1%).

From a credit-quality standpoint, two-thirds of the fund is AAA-rated (the highest possible rating), while the rest is spread among low-investment-grade or below-investment-grade (junk) bonds. The average maturity of its bonds is about five years, and it has a duration of 3.6 years, implying that a 1-percentage-point increase in interest rates will send TOTL 3.6% lower.

The 2.6% yield isn't much to look at, but it's a lot more than what you're getting from the "Agg" index and longer-dated Treasuries. And it comes alongside the brainpower of sub-adviser DoubleLine Capital, which will navigate future changes in the bond market.

Learn more about TOTL at the SPDR provider site.

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GraniteShares Gold Trust

gold bar
  • Type: Commodity (Gold)
  • Market value: $652.5 million
  • Dividend yield: N/A
  • Expenses: 0.1749%
  • Return since Feb. 19: +1.7%

Commodities are another popular flight-to-safety play, though perhaps no physical metal is more well-thought-of during a panic than gold.

A lot of that is a fear of a horrible-case scenario: If the world's economies collapse and paper money means nothing, humans need something to use for transactions, and many believe that something will be the shiny yellow element that we used as currency for thousands of years. At that point, however, your IRA will be the last of your worries.

But there is a case for gold as a hedge. It's an "uncorrelated" asset, which means it doesn't move perfectly with or against the stock market. It's also a hedge against inflation, often going up when central banks unleash easy-money policies. Because gold itself is priced in dollars, weakness in the U.S. dollar can make it worth more. So sometimes, it pays to have a small allocation to gold.

You could buy physical gold. You could find someone selling gold bars or coins. You could pay to have them delivered. You could find somewhere to store them. You could insure them. And when it's time to exit your investment, you could go to the trouble of finding a buyer of all your physical loot.

If that sounds exhausting, consider one of the many funds that trade based on the worth of actual gold stored in vaults.

The GraniteShares Gold Trust (BAR, $16.23) is one of the best ETFs for this purpose. Each ETF unit represents 1/100th of an ounce of gold. And with a 0.1749% expense ratio, it's the second-cheapest ETF that's backed by physical gold. Traders also like BAR because of its low spread, and its investment team is easier to access than those at large providers. All these factors have contributed to the fund's rising popularity. While BAR's price has climbed 24% amid a surge in gold over the past year, its assets under management have expanded by 41%.

Learn more about BAR at the GraniteShares provider site.

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VanEck Vectors Gold Miners ETF

gold mine
  • Type: Industry (Gold mining)
  • Market value: $13.5 billion
  • Dividend yield: 0.7%
  • Expenses: 0.52%
  • Return since Feb. 19: +2.5%

There's another way to invest in gold, and that's by purchasing stocks of the companies that actually dig up the metal. While these are publicly traded firms that bring in revenues and report quarterly financials like any other company, their stocks are largely dictated by gold's behavior, not what the rest of the market is doing around them.

Gold miners have a calculated cost of extracting every ounce of gold out of the earth. Every dollar above that pads their profits. Thus, the same pressures that push gold higher and pull it lower will have a similar effect on gold mining stocks.

The VanEck Vectors Gold Miners ETF (GDX, $29.97) is among the best ETFs for this purpose. It's the largest, too, at more than $13 billion in assets.

GDX holds 47 stocks engaged in the actual extraction and selling of gold. (VanEck has a sister fund, GDXJ, that invests in the "junior" gold miners that hunt for new deposits.) That said, the cap-weighted nature of the fund means that the largest gold miners have an outsize say in how the fund performs. Newmont (NEM) makes up 12.4% of assets, while Barrick Gold (GOLD) is another 11.0%.

But why buy gold miners when you could just buy gold? Well, gold mining stocks sometimes move in a more exaggerated manner – as in, when gold goes up, gold miners go up by even more. Over the past year, for instance, BAR has climbed 23.5%, but the GDX has outpaced it with a 32.5% price gain.

Learn more about GDX at the VanEck provider site.

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ProShares Short S&P500 ETF

bear
  • Type: Inverse stock
  • Market value: $2.0 billion
  • Dividend yield: 1.8%
  • Expenses: 0.89%
  • Return since Feb. 19: +7.5%

All of the ETFs shared are at least likely to lose less than the market during a downturn. Several might even generate positive returns.

But the ProShares Short S&P500 ETF (SH, $24.70) is effectively guaranteed to do well if the market crashes and burns.

The ProShares Short S&P500 ETF is a complex machine of swaps and other derivatives (financial instruments that reflect the value of underlying assets) that produces the inverse daily return (minus fees) of the S&P 500 Index. Or, put simply, if the S&P 500 goes up 1%, SH will go down 1%, and vice versa. If you look at the chart of this ETF versus the index, you'll see a virtual mirror image.

This is the most basic of market hedges. Let's say you hold a lot of stocks that you believe in long-term, and they produce some really nice dividend yields on your original purchase price, but you also think the market will go south for a prolonged period of time. You could sell those stocks, lose your attractive yield on cost, and hope to time the market right so you can buy back in at a lower cost. Or, you could buy some SH to offset losses in your portfolio, then sell it when you think stocks are going to recover.

The risk is clear, of course: If the market goes up, SH will nullify some of your gains.

Yes, there are much more aggressive "leveraged" inverse ETFs that provide double or even triple this kind of exposure, whether it's to the S&P 500, market sectors or even specific industries. But that's far too risky for buy-and-hold investors. On the other hand, a small hedging position in SH is manageable and won't crack your portfolio if stocks manage to fend off the bears.

Learn more about SH at the ProShares provider site.

Sours: https://www.kiplinger.com/slideshow/investing/t022-s001-the-12-best-etfs-to-battle-a-bear-market/index.html

Market best etf bear

The Best Inverse ETFs of the 2020 Bear Market

Contrarian investors seeking to capitalize on stock market declines can profit during a bear market using an inverse exchange-traded fund (ETF). A bear market is typically defined as a situation where securities prices fall 20% or more from recent highs amid widespread investor pessimism. The spread of COVID-19 and its effect on investor sentiment triggered a collapse in securities prices earlier this year. Inverse ETFs are designed to make money when the stocks or underlying indexes they target go down in price. These funds make use of financial derivatives, such as index swaps, in order to make bets that stock prices will decline. Unlike shorting a stock, though, investors in inverse ETFs can make money when markets fall without having to sell anything short.

Key Takeaways

  • The 2020 bear market lasted from February 19 to March 23, and the S&P 500's total return was -33.8% from peak to trough.
  • The inverse ETFs with the best performance during the 2020 bear market were RWM, DOG, and HDGE.
  • To achieve their inverse exposure, the first two ETFs make use of various swap instruments, and the third ETF holds short positions in different stocks.

The inverse ETF universe is comprised of about 10 ETFs, excluding leveraged ETFs and ETFs with less than $50 million in assets under management (AUM).The last bear market took place from February 19, 2020 to March 23, 2020, during which the total return for the S&P 500 was -33.8%. The best inverse ETF during the 2020 bear market, based on its total return between the two dates above, was the ProShares Short Russell 2000 (RWM). We examine the three best inverse ETFs of the 2020 bear market below. All numbers in this story are as of March 3, 2021.

Inverse ETFs can be riskier investments than non-inverse ETFs, because they are only designed to achieve the inverse of their benchmark's one-day returns. You should not expect that they will do so on longer-term returns. For example, an inverse ETF may return 1% on a day when its benchmark falls -1%, but you shouldn't expect it to return 10% in a year when its benchmark falls -10%. For more details, see this SEC alert.

ProShares Short Russell2000 (RWM)

  • Bear market return: 55.4%
  • Performance over 1-Year: -30.95%
  • Expense Ratio: 0.95%
  • Annual Dividend Yield: 1.20%
  • Average Trading Volume: 2,085,612
  • Assets Under Management: $254.83 million
  • Inception Date: January 23, 2007
  • Issuer: ProShares

RWM seeks to provide a daily return, before fees and expenses, that is -1x the daily performance of the Russell 2000 Index, an index which tracks the performance of the small-cap segment of the U.S. equity market. The ETF makes use of both ETF and index swaps to achieve its inverse exposure. Since the -1x exposure is for a single day, investors holding the fund for longer than a day will be exposed to compounding effects, causing returns to deviate from the expected inverse exposure.

ProShares Short Dow30 (DOG)

  • Bear market return: 47.3%
  • Performance over 1-Year: -20.44%
  • Expense Ratio: 0.95%
  • Annual Dividend Yield: 1.96%
  • Average Trading Volume: 907,272
  • Assets Under Management: $314.36 million
  • Inception Date: June 19, 2006
  • Issuer: ProShares

DOG aims to provide a daily return, before fees and expenses, that is -1x the daily performance of the Dow Jones Industrial Average (DJIA). The Dow is an index that tracks 30 large, publicly-owned blue chip companies on the New York Stock Exchange (NYSE). The ETF provides inverse exposure to these 30 stocks through the use of various swap instruments. Since the inverse exposure is daily, investors holding the fund for longer periods of time should not expect -1x performance. The fund uses DJIA swaps to obtain its inverse exposure.

AdvisorShares Ranger Equity Bear ETF (HDGE)

  • Bear market return: 47.3%
  • Performance over 1-Year: -43.48%
  • Expense Ratio: 3.36%
  • Annual Dividend Yield: 0.27%
  • 3-Month Average Daily Volume: 1,093,326
  • Assets Under Management: $56.81 million
  • Inception Date: January 26, 2011
  • Issuer: AdvisorShares

HDGE seeks to achieve positive returns by shorting stocks listed on U.S. exchanges. The ETF uses a combination of quantitative and fundamental factors in order to build a portfolio of equities to short. Good candidates are stocks of firms with low earnings quality or aggressive accounting practices. However, shorting stocks is expensive, which results in high ETF fees. The fund's three biggest shorts are Canon Inc. (CAJ), a Japan-based manufacturer of copying machines, printers, cameras, and lithography equipment; Pros Holdings Inc. (PRO), a provider of business software services; and Snap-On Inc. (SNA), a tool and equipment manufacturer.

The comments, opinions and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or to adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described on our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.

Sours: https://www.investopedia.com/investing/bear-market-etfs/
BEST Bear Market Crash Strategy for 2021 (How to Protect Your Crypto)

Worried About A Market Crash? Here Are 3 ETFs That Will Protect You

As the world continues to look forward to a post-COVID world, the economic recovery continues to progress nicely. Even though there are still some pockets of weakness - jobs, services - there's more than enough here to feel confident that we're in a fairly good place at the moment.

The equity markets have certainly responded in kind and them some. The S&P 500 has been regularly touching new all-time highs for months. Cyclicals and value stocks are finally participating. Of course, we have the Fed and the government to thank for all the free money flooding the marketplace.

On the flip side, however, stock returns have outpaced earnings growth and equities are looking expensive once again, even historically expensive according to a few metrics. If the Fed begins tightening policy in the near future (and indications are that it's at least being discussed right now) or if inflation begins running too hot, it's easy to see stocks pulling back 10-20% in fairly short order.

In other words, downside risk should be a consideration today. It might be time to consider layering on some protection to your portfolio.

While the natural inclination might be to move some of your portfolio to cash or bonds, there are ETFs out there that allow you to maintain most of your upside exposure in case stocks keep rallying, but hedge and manage to deliver gains even though the risk portion of your portfolio is declining.

These aren't funds that you necessarily want to dedicate a significant part of your portfolio to since they'll very likely underperform or produce losses in most bull market scenarios. But if there's a steep and sharp bear market, like the one we saw a year ago, these ETFs will really shine. These funds could be especially valuable to people who are concerned about principal protection in their portfolios, such as retirees.

The following 3 ETFs use different strategies to hedge against downside risk, but are worth considering in the current environment.

Cambria Tail Risk ETF (TAIL)

This more of a pure downside hedge. TAIL intends to invest in a portfolio of "out-of-the-money" put options purchased on the U.S. stock market. It may also buy more puts when volatility is low and fewer puts when volatility is high.

Cambria is very forthright in saying how the fund should be expected to perform. According to its website, "As the fund is designed to be a hedge against market declines and rising volatility, Cambria expects the fund to produce negative returns in the most years with rising markets or declining volatility."

We can see this in play as the fund has been steadily declining throughout the post-COVID bear market rebound. It's during the bear market itself, though, where TAIL really shined. While the S&P 500 was falling 30%, TAIL managed to produce a positive 30% return as those previously out-of-the-money put options quickly became very valuable.

How much of your portfolio you dedicate to a product like this is, of course, up to personal preference. Too much and you'll significantly cap your upside potential. 5% might be a good starting point depending on how much risk you feel there is at the moment.

Amplify BlackSwan Growth & Treasury Core ETF (SWAN)

SWAN takes a bit of a different approach by offering a portfolio that both participates in equity market upside and the downside protection offered by Treasuries. In essence, you've got more of a balanced portfolio, but one that is structured to try to avoid equity market downside.

SWAN invests 10% of portfolio assets in long-term S&P 500 LEAP option contracts with the remaining 90% getting invested in mixed duration Treasuries. The long call options have a delta of around 70, meaning that they could be expected to offer 70% of the upside of the S&P 500. The Treasury position would independently act like government securities normally would, but with the long-term inverse relationship to equities, they could be expected to offset some equity risk.

In a bull market, you could expect to receive 70% of equity market returns plus whatever Treasuries manage to return during that time. In a bear market, the call options would, in theory, simply expire out-of-the-money, helping to avoid some of the downside of a straight long position in the stocks themselves, while potentially offering some gains from Treasuries.

The fund only reconstitutes itself semi-annually, so there is a possibility that SWAN won't provide a consistent downside hedge, but historical risk measures suggest that this fund is only 50-60% as risky as the S&P 500.

AGFiQ U.S. Market Neutral Anti-Beta ETF (BTAL)

BTAL is a long-short strategy that establishes long positions in low beta stocks, while shorting high beta ones.

It's considered a downside hedge because of how you could reasonably expect equities to perform in down markets. During market declines, high beta stocks could be expected to produce greater losses than low beta stocks. The gains produced by the short high beta positions should, in theory, more than offset the losses from the long low beta positions, resulting in a net gain overall. Essentially, BTAL could expect to produce a gain whenever low beta outperforms high beta regardless of whether stocks overall are rising or falling.

As you can imagine, BTAL has produced losses recently as investors have loaded up on growth stocks during the economic recovery, but there's been some bounce back lately as low beta and value stocks have staged a rebound. Given the constant 50% short position, you don't want to make this a core position in your portfolio, but a small allocation could help cap some downside risk.

Also read:

A Better Way To Invest? XVOL Offers The S&P 500 With A Built-In VIX Hedge

Cathie Wood Calls For ARK ETFs To Triple Over The Next 5 Years

QQQ vs. QQQM vs. QQQJ: What To Expect From The Big 3 Nasdaq ETFs

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SEC Calls Bitcoin "Highly Speculative" With "Potential For Fraud"

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ARKK Is Down 30% From Its Highs; Is It Time To Sell?

This Multi-Asset ETF With A 10% Yield Could Be Just What Your Portfolio Needs

Sours: /etffocus/

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Inverse Equity ETF List

This is a list of all Equity ETFs traded in the USA which are currently tagged by ETF Database. Please note that the list may not contain newly issued ETFs. If you’re looking for a more simplified way to browse and compare ETFs, you may want to visit our ETF Database Categories, which categorize every ETF in a single “best fit” category.

* Assets and Average Volume as of 2021-10-11 16:30 EDT

This page includes historical return information for all Equity ETFs listed on U.S. exchanges that are currently tracked by ETF Database.

The table below includes fund flow data for all U.S. listed Equity ETFs. Total fund flow is the capital inflow into an ETF minus the capital outflow from the ETF for a particular time period.

Fund Flows in millions of U.S. Dollars.

The following table includes expense data and other descriptive information for all Equity ETFs listed on U.S. exchanges that are currently tracked by ETF Database. In addition to expense ratio and issuer information, this table displays platforms that offer commission-free trading for certain ETFs.

Clicking on any of the links in the table below will provide additional descriptive and quantitative information on Equity ETFs.

The following table includes ESG Scores and other descriptive information for all Equity ETFs listed on U.S. exchanges that are currently tracked by ETF Database. Easily browse and evaluate ETFs by visiting our ESG Investing themes section and find ETFs that map to various environmental, social, governance and morality themes.

This page includes historical dividend information for all Equity ETFs listed on U.S. exchanges that are currently tracked by ETF Database. Note that certain ETPs may not make dividend payments, and as such some of the information below may not be meaningful.

The table below includes basic holdings data for all U.S. listed Equity ETFs that are currently tagged by ETF Database. The table below includes the number of holdings for each ETF and the percentage of assets that the top ten assets make up, if applicable. For more detailed holdings information for any ETF, click on the link in the right column.

The following table includes certain tax information for all Equity ETFs listed on U.S. exchanges that are currently tracked by ETF Database, including applicable short-term and long-term capital gains rates and the tax form on which gains or losses in each ETF will be reported.

This page contains certain technical information for all Equity ETFs that are listed on U.S. exchanges and tracked by ETF Database. Note that the table below only includes limited technical indicators; click on the “View” link in the far right column for each ETF to see an expanded display of the product’s technicals.

This page provides links to various analysis for all Equity ETFs that are listed on U.S. exchanges and tracked by ETF Database. The links in the table below will guide you to various analytical resources for the relevant ETF, including an X-ray of holdings, official fund fact sheet, or objective analyst report.

This page provides ETF Database Ratings for all Equity ETFs that are listed on U.S. exchanges and tracked by ETF Database. The ETF Database Ratings are transparent, quant-based evaluations of ETFs relative to other products in the same ETF Database Category. As such, it should be noted that this page may include ETFs from multiple ETF Database Categories.

Sours: https://etfdb.com/etfs/inverse/equity/


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