6 Low-Beta ETFs To Bet On Amid Market Volatility

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After a huge rally, Wall Street was caught in a vicious circle of trading earlier this month. This is especially true, as rising commodity prices have sparked inflation fears making investors jittery.

Additionally, bouts of the latest data indicate that the strong economic recovery might be slowing. U.S. consumer confidence fell slightly in May for the first time this year as indicated by the Conference Board’s index. New home sales dropped in April as the surge in home prices threatened to slow the housing market momentum amid a tight supply. Retail sales growth paused last month after a solid 10.7% surge in March, the second-largest increase on record.

Hiring also slowed in April amid a shortage of workers. The U.S. economy added 266,000 jobs in April, far below economists’ expectations of 1 million while the unemployment rate nudged up from 6% to 6.1%.

However, the wider rollout of vaccinations, massive stimulus, and pandemic restriction rollbacks are instilling confidence among the sectors poised to benefit from the recovering economy. The combination has been powering activities across all sectors and categories, resulting in increased consumer spending. In fact, the U.S. economy grew 6.4% annually in the first quarter, representing the second-strongest increase since 2003 and is expected to top 7% this year, which would be the fastest since 1984, per several economists. This would follow the 3.5% contraction in 2020, which was the worst performance in 74 years. Moreover, the astounding improvement in corporate earnings also bodes well for the stocks.

As a result, investors may want to remain invested in the equity world but at the same time seek protection from a downside. This could be easily achieved by investing in low-beta products.

Why Low Beta?

Beta measures the price volatility of stocks relative to the overall market. It has a direct relationship to market movements. A beta of 1 indicates that the price of the stock or fund tends to move with the broader market. A beta of more than 1 indicates that the price tends to move higher than the broader market and is extremely volatile while a beta of less than 1 indicates that the price of the stock or fund is less volatile than the market.

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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 ...

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