ETF Strategies To Combat Coronavirus Outbreak

The latest coronavirus outbreak in China has claimed 17 lives as of Jan 22, reminding us of the Severe Acute Respiratory Syndrome (SARS) coronavirus eruption in 2002-2003. The SARS outbreak was responsible for nearly 800 deaths worldwide, rattling the financial markets. Notably, about 570 confirmed cases have been registered so far. Chinese authorities have implemented strict travel restrictions for the central cities of Huanggang, Ezhou and Wuhan.

Resultantly, the world’s major indices are taking a hit. Chinese stocks have also seen the steepest decline in more than eight months. Moreover, U.S. benchmark indexes started retracting from record highs witnessed last week. In fact, the U.S. Centers for Disease Control and Prevention has announced the first case of coronavirus in the United States. Notably, the United States is the fifth country to report a coronavirus case after China, Thailand, Japan and South Korea.

ETF Strategies to Follow

The Lunar New Year holiday is on Jan 25. It is a time when millions of people will be traveling to and from China. But, the outbreak is impacting travel-related stocks and luxury brands. Even oil prices have slipped to the lowest in seven weeks on fears of reduced demand. Given the situation, let’s look at some ETF strategies that investors can follow for a smooth sail in these turbulent times.

Dividend ETFs

In a low-interest rate environment, dividend investing has been the hot spot and seems an excellent choice for 2020. Against this backdrop, dividend ETFs like WisdomTree U.S. Quality Dividend Growth Fund (DGRW - Free Report), FlexShares Quality Dividend Defensive Index Fund QDEFWBI Power Factor High Dividend ETF (WBIY - Free Report)  and Schwab US Dividend Equity ETF SCHD might be compelling picks.

REIT ETFs

Real estate investment trusts (REITs) have had a good run on the bourses in 2019. A dovish Fed can be cited as the main driving factor. When interest rate drops, mortgage rates fall, making real estate or refinancing mortgages more affordable. This in turn boosts real estate sales. These funds offer outsized yields and act as good investing options when increased safe-haven trades keep yields at check. In view of this, investors can consider ETFs like JPMorgan BetaBuilders MSCI US REIT ETF (BBRE), iShares Core U.S. REIT ETF USRTNuveen Short-Term REIT ETF NUREInvesco S&P 500 Equal Weight Real Estate ETF (EWRE - Free Report) and Schwab U.S. REIT ETF (SCHH - Free Report).

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