Multi-Asset ETFs: The Bets Of The Hour

The first half of 2016 was tumultuous with China and oil roiling the market in Q1 and the monumental event (or disaster) like Brexit in the final month of Q2. Plus, growth issues persisted in several corners of the globe, especially in the developed world, and oil prices continued its seesaw ride.

Though the broader market climbed the wall of worry to start Q3 thanks to a volley of upbeat U.S. economic data, the deterrents are still rearing their ugly heads. 

Definitely, back-to-back months of strong job gains, wage growth, better housing, decent, though not great, inflation and manufacturing data and solid retail sales are enough to charge up investors (read: Play Global Market Rally with These ETFs).

But soft Q2 productivity, lower-than-expected GDP data for the quarter and subdued business spending are causes of concern. Added to these, the second half of 2016 may be volatile due to the presidential election.

Plus, Brexit blues may resurface anytime. Most central banks are extremely dovish on boosting growth of their respective economies. Japan and the Euro zone are practicing negative rates along with massive monetary stimulus.

All in all, the U.S. economy is on the mend, but still has a long way to go and can even derail if global macroeconomic threats flare up. Plus, stocks are deemed to be overvalued by several analysts as well as the Fed. This is especially true given the ongoing earnings recession.

If Stocks Overvalued What About U.S. Treasuries?

Not only stocks, U.S. treasuries have staged an astounding rally this year (as of August 11, 2016) with iShares 20+ Year Treasury Bond TLT adding over 16%, and PIMCO 25+ Year Zero Coupon U.S. Treasury Index Exchange-Traded Fund ZROZ and Vanguard Extended Duration Treasury ETF EDV surging even higher by over 25%.

The bet for the near-term Fed hike has taken a back seat lately. Now the question is, how long can this rally last? (read: What Does the Solid July Job Data Mean for Bond ETFs?)

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Disclosure: None.

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