Hedge Market Volatility With These ETFs

The U.S. stock market has shown a strong rally, having climbed about 40% since hitting March lows. But the ascent has been uneven over the past week as renewed concerns over coronavirus fears have emerged after the reopening of the economy.

The latest report showed that new COVID-19 infections soared to record highs in six U.S. states — Arizona, Florida, Oklahoma, Oregon and Texas — on Jun 16, marking a rise in cases for the second consecutive week. Hospitalizations are also rising or are at record highs. Additionally, tensions with China have risen given that President Trump has threatened to cut ties with China, a day after his top diplomats held talks with Beijing and his trade representative said he did not consider decoupling U.S. and China’s economies a viable option.

However, a flood of liquidity in the form of fiscal and economic stimulus will continue to provide an upside to the stocks. The Federal Reserve steeped in for more stimulus and said that it would begin purchasing individual corporate bonds as part of its emergency lending program to inject liquidity into the virus-stricken economy. Additionally, President Donald Trump’s administration is preparing a $1 trillion infrastructure proposal to spur the world’s largest economy back to life.

Further, the latest bout of economic data related to manufacturing, job data, housing, retail sales and consumer confidence indicates that the economy is recovering faster than expected. This has bolstered investors’ confidence.

In such a scenario, investors should apply some hedging techniques to their equity portfolio. While there are a number of ways to do this, we have highlighted five volatility-hedged ETFs that could prove beneficial amid market uncertainty. Investors should note that these funds have the potential to stand out and outperform the simple vanilla funds in case of rising volatility.

How to Play

DeltaShares S&P 500 Managed Risk ETF (DMRL - Free Report)

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