Play These Bond ETFs To Keep The Coronavirus Fear At Bay

Coronavirus has worsened into a world-wide epidemic scare with the death toll rising to 213 along with 9,692 confirmed cases. Moreover, around 102,427 cases are under closed monitoring. The World Health Organization (WHO) declared the deadly coronavirus eruption as a global emergency. This outbreak also gripped markets, dragging all major U.S. indices down from record highs.

Going by past epidemics, analysts believe that there are chances of more declines in the markets. This downtrend in equity markets can make investors jittery, adding to the lure of the bond ETFs. Moreover, total cases registered during the SARS epidemic in China are now surpassed by the coronavirus eruption (read: 5 ETFs to Protect Your Portfolio From Coronavirus Threat).

Globally, confirmed cases have so far been reported from around 22 countries including the United Arab Emirates, the United Kingdom, Germany, Hong Kong, Australia, Malaysia, Thailand, France, India, Philippines, Japan, Taiwan, Vietnam, Singapore, South Korea, Macao and Nepal with the epicenter in Wuhan, China.The contagious coronavirus is sparking fears of global economic slowdown among investors.

Per investment bank Goldman Sachs, this deadly coronavirus endemic will affect China’s economic growth by 0.4% in 2020. It also anticipates that first-quarter 2020 economic growth in the United States will be dented by 0.4% on account of lower exports and tourism. Moreover, the outbreak is disturbing the global supply chain for technology companies. This is because China has been a major manufacturer and supplier for many technology players in the United States. Major retailers, restaurants and hotels  in the United States, which earn a large portion of revenues from operations in China, are expected to suffer huge blows (read: Will Consumer Discretionary ETFs Suffer the Coronavirus Blow?).

Should You Opt for Bond ETFs?

In 2019, the Sino-US trade ambiguity, rising Middle East tensions, uncertainty in market conditions due to geopolitical tensions, slowdown in the global economy and Brexit woes added stimulus to the temptation of bond ETFs. In fact, 51% of the net cash flows into U.S.-based exchange-traded funds were invested in fixed-income assets. The rapidly-aggravating concerns regarding the plaguing coronavirus are making high-yielding fixed-income investments attractive.  

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