5 Amazing ETF Strategies For The Fourth Quarter

After three solid quarters of 2019, Wall Street saw the worst start to the fourth quarter in about a decade with two consecutive days of decline. This is primarily thanks to the latest barrage of downbeat economic reports that point to deeper domestic troubles.

Most notably, the Institute for Supply Management’s purchasing managers index for the manufacturing sector dropped to 47.8 in September, representing the lowest level in more than a decade. Per the employment report from Automatic Data Processing, the United States added a modest 135,000 jobs in September. Average monthly job growth fell to 145,000 over the past three months from 214,000 in the year-ago quarter.

The combination of weak data came amid a persistent Sino-American dispute that has raised recessionary fears and the prospect of further tightening by the Fed. The central bank has slashed interest rates by 25 basis points (bps) each for two times in the third quarter since the financial crisis to sustain a decade-long economic expansion. Additional rate cuts might be in cards if the same trend persists and Powell pledges to "act as appropriate" to sustain the expansion.

Additionally, lingering worries about Britain’s exit from the European Union, President Donald Trump’s impeachment inquiry and geopolitical tension continued to unnerve investors. Further, this earnings season is expected to be weak with S&P 500 earnings likely to be down 4.7% from the same period last year on 4.3% higher revenues. This would follow 0.4% growth in Q2 and a flat showing in Q1.

Against such a backdrop, it is difficult to plan investments that could fetch sure-shot returns. In this case, we have highlighted some investing ideas that could prove to be extremely beneficial for investors in the fourth quarter in the current market environment:

Prepare for Volatility

Investors should prepare themselves for volatility in the fourth quarter. While there are many ways to survive the market turmoil, investing in lower volatility ETFs could reduce losses in declining markets, while generate decent returns when the markets rise. ETFs like iShares Edge MSCI Min Vol USA ETF (USMV - Free Report), Invesco S&P 500 Low Volatility ETF (SPLV - Free Report), SPDR Russell 1000 Low Volatility Focus ETF (ONEV - Free Reportand SPDR SSGA US Large Cap Low Volatility Index ETF LGLV could be compelling choices. Most of these have a Zacks ETF Rank #2 (Buy) or 3 (Hold).

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Disclosure: Zacks.com contains statements and statistics that have been obtained from sources believed to be reliable but are not guaranteed as to accuracy or completeness. References to any specific ...

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