Did Safe Haven ETFs Protect Your Portfolio From Market Turmoil?

Image: Bigstock

This year has been very challenging for investors, with stocks and bonds plunging at pace not seen in decades. The S&P 500 (SPY - Free Report) is down 23%, the Nasdaq (QQQ - Free Report) has fallen 31% and the long term treasury bond ETF (TLT - Free Report) has lost 24% in 2022.

Historically, safe-haven assets like the US dollar, gold, treasury bonds, and the Japanese yen have provided some protection during periods of immense market turmoil, but this year is just different.

Rising interest rates in the US have boosted the dollar, which is now at a new two-decade high. The yen, on the other hand, has been battered and is at its lowest level since 1998 as the Bank of Japan is expected to continue its ultra-easy monetary policy.

The Invesco DB U.S. Dollar Index Bullish Fund (UUP) and the WisdomTree Bloomberg U.S. Dollar Bullish Fund (USDU) track the performance of the greenback relative to other major currencies.

Gold is up about 2% this year, significantly outperforming stocks and bonds. While gold also acts as an inflation hedge, it usually moves inversely to the US dollar. Further, rising rates dim the appeal of gold as it yields no income.

The SPDR Gold Shares (GLD - Free Report) is the most popular product in the space while the SPDR Gold MiniShares Trust (GLDM - Free Report) is the cheapest. Both are physically backed.

Despite poor performance, many investors have started buying treasury bond ETFs as they believe that rates have gone up too much too soon. The iShares Short Treasury Bond ETF (SHV) and the iShares U.S. Treasury Bond ETF (GOVT - Free Report) are among the bond funds that have seen impressive inflows lately.

Video Length: 00:10:14

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 ...

How did you like this article? Let us know so we can better customize your reading experience.


Leave a comment to automatically be entered into our contest to win a free Echo Show.