Wall Street delivered downbeat performances last week due to rising rates. The S&P 500 (down 2.1%), the Dow Jones (down 2.2%), the Nasdaq (down 2.6%) and the Russell 2000 (down 3.1%) – all key indexes slumped last week. The Dow Jones marked its worst since March. The Nasdaq Composite tumbled for a third successive losing week — a first since December, per CNBC.
The Fed minutes released last week shed light on the discussions surrounding inflation and the need for further rate hikes. A significant division among members was evident, with various viewpoints on the appropriate course of action. However, the majority of members see “significant upside risks” to inflation.
This has raised the Treasury bond yields. The benchmark U.S. Treasury yields started the week at 4.19%, hit a high of 4.30% (its highest level since October 2022) and ended the week at 4.26%. If this was not enough, the pain in the China’s real estate sector is intensifying. While default fears of bond payments by developer Country Garden are mounting, China’s property giant Evergrande has filed for U.S. bankruptcy protection.
Notably, Evergrande defaulted on its huge debts in 2021, which sent shockwaves through global financial markets. In fact, the news from China has boosted the risk-off trade sentiments to some extent to close out the week. Against this backdrop, below we highlight a few ETFs that could go higher this week as these give protection against market selloffs.
ETFs in Focus
Simplify Tail Risk Strategy ETF CYA – Up 8.4% Last Week
The Simplify Tail Risk Strategy ETF seeks to provide investors with a standalone solution for hedging diversified portfolios against severe equity market selloffs. The fund charges 84 bps in fees.
AdvisorShares Dorsey Wright Short ETF DWSH – Up 4.9% Last Week
The AdvisorShares Dorsey Wright Short ETF is actively-managed with an investment focus that involves buying securities that have appreciated in price more than the other securities in the investment universe and holding those securities until they underperform. The annual expense ratio of the fund is 2.77%.
AGF U.S. Market Neutral Anti-Beta Fund BTAL – Up 2.6% Last Week
The underlying Dow Jones U.S. Thematic Market Neutral Anti-Beta Index is a long / short market neutral index that is dollar-neutral. The expense ratio of the fund is 1.54%.
Franklin Systematic Style Premia ETF FLSP – Up 2% Last Week
The fund looks to maintain a relatively low correlation to traditional asset classes and to deliver positive returns in rising or falling markets. The fund charges 65 bps in fees.
AGF U.S. Market Neutral Anti-Beta Fund (BTAL): ETF Research Reports
AdvisorShares Dorsey Wright Short ETF (DWSH): ETF Research Reports
Franklin Systematic Style Premia ETF (FLSP): ETF Research Reports
Simplify Tail Risk Strategy ETF (CYA): ETF Research Reports
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