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Volatility has been regulating the market for some time now. In the United States, worries about rising rates have frightened the entire market. Overvaluation, trade tensions between the United States and China and the resulting pressures on global growth, geopolitical issues and uncertainties surrounding the medium-term outlook add to the concerns (see: ETF Strategies for the mid-term elections).
Although the whole month of October was tumultuous, October 24 was marked by strong sales, with S & P, Dow Jones and Nasdaq Composite losing 3.1%, 2.4% and 4.4% respectively. %. The S & P 500 and the Dow Jones are now in the red for the year and the Nasdaq has slipped into the territory of the correction. CBOE Volatility Index , widely regarded as the best indicator of fear in the market, rose 21.8%. The index is up 103% last month (as of October 24, 2018) (read: October, traditionally the most volatile: ETFs earned).
Three big American ETFs – SPDR S & P 500 ETF (SPY – Free report), SPDR Dow Jones Industrial Average ETF (DIA – Free report) and Invesco QQQ Trust (QQQ – Free Report) – lost about 9.1%, 7.9% and 11.2% this month (as of October 24, 2018). Meanwhile, the global ETF iShares MSCI ACWI ETF (ACWI – Free Report) paid about 9.5%. For the year, the S & P 500 and Dow Jones are down 1.5% and 0.1%.
Morgan Stanley fears increased selling pressure on Wall Street due to "lower liquidity and growing worries about a spike in growth." Very few areas are in the green at the moment.
These low-risk ETFs may be useful
In this context, we are highlighting some low-risk ETFs to appease the nerves of investors.
Cambria Core Equity ETF (ROCC – Free report)
The actively managed fund uses a multitude of strategies to provide capital appreciation while lowering the risk quotient to market conditions. "The fund invests in high quality companies from all sectors and industries, offering long-term total return prospects because of their ability to generate earnings and their desire to increase dividends over time" according to the information sheet. The fund also buys index put options that can protect against any stock market crash. The fund added more than 0.7% on October 24 and 1.3% last month.
US SPDR SSGA ETF with low market capitalization and low volatility (SMLV – Free report)
This fund also tracks the performance of US small cap companies with low volatility. The fund weighs heavily on financial services (30.64%), followed by real estate (15.88%). It was up 0.6% on October 24th. Meanwhile, it lost 9% last month, in line with the S & P 500 index.
ETF iShares Edge MSCI Min Flight Flight USA Small Cap (SMMV – Free report)
The Underlying Index is composed of small cap stocks with lower volatility characteristics than the US small cap market. Real estate (15.28%), financial services (15.13%), health care (14.49%), consumer discretionary (10.48%) and technology. information (10.00%) are the top five sectors. It was down about 1.9% on October 24, but was losing (down 6.2%) less than the S & P 500.
The First Trust National Horizon Managed Volatility ETF (HUSV – Free report)
The fund seeks to achieve its investment objective by investing at least 80% of its net assets in common shares of domestic companies listed and traded on US national stock exchanges. The fund was down 1.2% on October 24 and lost only 5.3% last month.
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