5 Safe ETF Bets To Consider After A Dull Market Last Week

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Commenting on the market conditions, Adam Crisafulli of Vital Knowledge has said that “Stocks are kicking off the week deeply in the red as all the anxiety and negativity from Thurs/Fri carried over the weekend. The dramatic shift in ECB/FOMC tightening expectations last week remains a huge overhang, but China is quickly rising the top of the list of market fears as COVID shutdown concerns spread to Beijing,” as stated in a CNBC article.

Considering the tough market conditions, let’s find out some investment options for the market participants who wish to ride safe:

Vanguard Health Care ETF (VHT)

The healthcare sector is a good defensive investment option as several investors believe consumers will have to purchase healthcare products even during tough and uncertain times. Currently, the Russia-Ukraine war crisis and the Fed’s aggressive stance on rate hikes are causing a lot of market uncertainty. Undoubtedly, the pandemic triggered a race to introduce vaccines, tests and treatment options, opening up investment opportunities in the healthcare sector.

Vanguard Health Care ETF seeks to track the performance of the MSCI US Investable Market Health Care 25/50 Index. VHT has AUM of $17.76 billion and charges 10 basis points (bps) of fees).

ProShares S&P 500 Dividend Aristocrats ETF (NOBL)

Dividend aristocrats are blue-chip dividend-paying companies with a long history of increasing dividend payments year over year. Moreover, dividend aristocrat funds give investors dividend growth opportunities compared to other products in the space but might not necessarily have the highest yields. These products also form a strong portfolio, with a higher scope of capital appreciation against simple dividend-paying stocks or those with high yields. As a result, these products deliver a nice combination of annual dividend growth and capital-appreciation opportunity and are mostly good for risk-averse long-term investors.

ProShares S&P 500 Dividend Aristocrats ETF seeks investment results before fees and expenses that track the performance of the S&P 500 Dividend Aristocrats Index. NOBL is the only ETF focusing exclusively on the S&P 500 Dividend Aristocrats, which are high-quality companies that paid out dividends and raised the same for at least 25 consecutive years, with most doing so for 40 years or more. NOBL amassed $10.61 billion in its asset base. ProShares S&P 500 Dividend Aristocrats ETF has an expense ratio of 0.35%.

iShares S&P 500 Value ETF (IVE)

It is worth noting here that value investing seems more lucrative, given the rebounding U.S. economy, the expectation of higher inflation and the chances of Fed interest rate hikes. Moreover, value stocks seek to capitalize on market inefficiencies. They can deliver higher returns with lower volatility than their growth and blend counterparts. Additionally, value stocks are less exposed to trending markets and their dividend payouts offer a shield against market turbulence.

The iShares S&P 500 Value ETF seeks to track the investment results of an index composed of large-capitalization U.S. equities that exhibit value characteristics. With AUM of $25.71 billion, it charges 18 bps in expense ratio.

iShares U.S. Consumer Staples ETF (IYK)

The consumer staples sector is known for its non-cyclical nature and acts as a safe haven during unstable market conditions. Moreover, like utility, consumer staples is considered a stable sector for the long term as its players are likely to offer decent returns. During an economic recession, investors can consider parking their money in the non-cyclical consumer staples sector. This high-quality sector, which is largely defensive, has a low correlation factor with economic cycles.

iShares U.S. Consumer Staples ETF seeks to track the investment results of an index composed of U.S. equities in the consumer staples sector. IYK has AUM of $1.14 billion and charges 41 bps of fees.

FlexShares Quality Dividend Index Fund (QDF)

Quality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility and high margins. These stocks also have a track record of stable or increasing sales and earnings growth. Compared to plain vanilla funds, these products help lower volatility and perform better during market uncertainty. Further, academic research has proven that high-quality companies constantly provide better risk-adjusted returns than the broader market over the long term.

FlexShares Quality Dividend Index Fund seeks investment results that generally correspond to the price and yield performance, before fees and expenses, of the Northern Trust Quality Dividend Index. With AUM of $1.72 billion, QDF charges 0.37% of fees.

Disclaimer: Neither Zacks Investment Research, Inc. nor its Information Providers can guarantee the accuracy, completeness, timeliness, or correct sequencing of any of the Information on the Web ...

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