The U.S. stock market witnessed wild swings last week buoyed by escalating trade tensions between the United States and China following the new rounds of sanction threats. All the major indices once again are in the red from a year-to-date look.
Inside the Trade Tensions
This is especially true, as President Donald Trump doubled down on the trade dispute by threatening to impose a new tariff of $100 billion against China in addition to the already proposed $50 billion of tariffs on Chinese goods targeting robotics, information technology, communication technology and aerospace. The United States earlier last week unveiled a list of 1,300 China-made products, which will be hit by 25% tariffs. These include a wide array of products including raw materials, construction machinery, agricultural equipment, electronics, medical devices and consumer goods. Notably, these were the key growth areas of China over the next seven years (read: 5 Inverse ETFs to Make a Fast Buck on Flaring Trade Tension).
In response to the new tariff of $100 billion, China hit back saying that it is ready to pay “any cost” in a trade war. The new taxes came a day after China hit back with likely 25% duties on 106 American goods including soybeans, corns, aircraft, and vehicles worth an estimated $50 billion, against Trump’s similar threat in response to alleged intellectual property theft. The second-largest economy has already imposed a duty on 128 American food products, including meat, fruit, pork, dried fruits, wine and aluminum scrap, worth $3 billion effective April 2, in retaliation against Trump’s severe tariff of 24% on steel and 10% on aluminum imports.
Given this, several ETFs saw a huge decline while a few stood tall in the market turbulence. Below, we have highlighted some of them:
ProShares VIX Short-Term Futures ETF VIXY
Volatility products have been the major gainers last week with VIXY rising 5.3%. It seeks to profit from increases in the expected volatility of the S&P 500, as measured by the prices of VIX futures contracts. The ETF focuses on the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration. It has amassed $112.7 million in AUM and charges 85 bps in fees per year (read: Value ETFs & Stocks to Enrich Your Portfolio Amid Volatility).
iShares Edge MSCI Multifactor Utilities ETF UTLF
Being the low-beta sector, utility is relatively protected from large swings (ups and downs) in the stock market and is thus considered a defensive investment or safe haven amid economic or political turmoil. At the same time, utilities offer solid dividend payouts and excellent capital appreciation over the longer term. As such, UTLF, which focus on proven drivers of return: inexpensive stocks, financially healthy firms, trending stocks and relatively smaller companies, gained 3.4% last week. The ETF is home to 28 stocks in its basket with none holding more than 9.14% of assets. About 63% of the portfolio is dominated by electric utilities while multi utilities take 27% share. The fund has accumulated $2.5 million in its asset base and charged 35 bps in fees per year. It currently has a Zacks ETF Rank #5 (Strong Sell) with a High risk outlook.
Global X Iconic U.S. Brands ETF LOGO
This ETF gained 2.7% last week. It seeks to invest in companies that possess strong brand equity, helping to build long-term loyalty among American consumers. Holding 101 stocks, the fund is well spread across components with none accounting for more than 2.31% of assets. It debuted in the space in October and has amassed $3.1 million in its asset base since then. The product charges 48 bps in annual fees.
Global X Health & Wellness Thematic ETF BFIT
This fund offers access to dozens of companies with high exposure to the health & wellness theme by tracking the Indxx Global Health & Wellness Thematic Index. None of the securities makes up for more than 4.7% of assets. BFIT has AUM of $2.6 million and charges 50 bps in annual fees. The ETF was up 2.5% last week. The optimism comes especially from the shift in investors’ sentiment to the industries, which generally outperform during periods of low growth and high uncertainty (see:all the Consumer Discretionary ETFs here).
Virtus LifeSci Biotech Clinical Trials ETF BBC
BBC, which was among the best performing fund this year, shed 9.9% last week. This fund has a novel approach to biotechnology investing with exposure to companies that are in the clinical trials’ stage. This can easily be done by tracking the LifeSci Biotechnology Clinical Trials Index. BBC holds 100 securities in its basket and has amassed $67.9 million in its asset base. It charges 79 bps in fees per year from investors and has a Zacks ETF Rank #3 (Hold) with a High risk outlook (read: 3 ETF Areas Up At Least 15% This Year).
PowerShares PureBeta MSCI USA Small Cap Portfolio PBSM
Despite the fact that the small caps are safer bets and offers protection against any political and economic turmoil, PBSM lost 8.4%. This ETF follows the MSCI USA Small Cap Index, which measures the performance of the small-cap segment of the U.S. equity market and weights securities by their free float-adjusted market capitalization. It holds a broad basket of 1766 securities, with each accounting for less than 0.5% of assets. The fund has accumulated $2.6 million in its asset base and charges 6 bps in annual fees (read: Focus on Small-Cap ETFs Amid Trade War Fears).
ETFMG Alternative Harvest ETF MJ
The hottest ETF of 2018 with a solid start seems to catch up in the market rout, losing 7.1% last week. With AUM of $332.2 million, the fund tracks the Prime Alternative Harvest Index, holding 39 stocks in its basket that are involved in the marijuana industry. Each security accounts for less than 5.8% share. MJ has expense ratio of 0.75% (read: Marijuana and Blockchain: 2018’s Hottest New ETFs).
Global X Robotics & Artificial Intelligence ETF (BOTZ)
The product offers exposure to 30 companies that potentially stand to benefit from increased adoption and utilization of robotics and AI, including those involved with industrial robotics and automation, non-industrial robots, and autonomous vehicles. This can be easily done by tracking the Indxx Global Robotics & Artificial Intelligence Thematic Index. None of the securities accounts for more than 8.7% of the assets. The ETF has amassed $2.4 billion in its asset base and charges 68 bps in annual fees from investors. It was down 5.1% last week (read: How to Invest in the Hottest Technologies With ETFs).