Get 40% Off
💰 Buffett reveals a $6.7B stake in Chubb. Copy the full portfolio for FREE with InvestingPro’s Stock Ideas toolCopy Portfolios

ETF Strategies to Sail Through New COVID-19 Strain-Led Volatility

Published 12/24/2020, 03:01 AM
Updated 07/09/2023, 06:31 AM
PFE
-
GLD
-
TSLA
-
QNET
-
RCL
-
AAL
-
MRNA
-

The world continues to struggle to control the coronavirus outbreak. Amid this ongoing health crisis, the discovery of a new COVID-19 strain has taken a toll on investor optimism about the introduction of coronavirus vaccines and another round of fiscal stimulus. This new variant, first discovered in England, has resulted in several nations imposing restrictions on travel from the U.K., per a CNN report. In fact, flights from the U.K. have been banned or travelers who have been in the country are facing restrictions in over two dozen countries, beginning from Italy to India to El Salvador, per a CNBC article.

Going on, concerns over the new virus strain impacted stocks of various airlines and cruise line operators which finished at their session lows, per the sources. Norwegian was down 1.6% and Royal Caribbean (NYSE:RCL) lost 0.7% on Dec 21. Moreover, American Airlines (NASDAQ:AAL) declined 2.5% after losing more than 5% previously, while United Airlines dropped 1.5% on the same day.

However, a CNN report states that Pfizer (NYSE:PFE) and Moderna (NASDAQ:MRNA) are testing their coronavirus vaccines for efficacy against the new mutated version of the virus that's been discovered in the U.K. and other countries (per the company statements). It is worth noting here that both the companies have received emergency use authorization from the FDA for their coronavirus vaccine.

Investors are worried that another round of business restrictions and lockdown measures might derail the economic recovery achieved so far. In such a scenario, investors can take a look at the following ETF strategies to combat the coronavirus crisis:

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Dividend ETFs to Take Shelter In

In a low-interest rate environment, dividend investing becomes a hot spot. Against this backdrop, dividend ETFs like WisdomTree U.S. Quality Dividend Growth Fund DGRW, FlexShares Quality Dividend Defensive Index Fund QDEF, WBI Power Factor High Dividend ETF (WBIY) and Schwab US Dividend Equity ETF (SCHD) might be compelling picks (read: ETF Strategies to Play as Coronavirus Outbreak Aggravates).

Invest in the ‘New Normal’ Trends

In view of the rising work-from-home and online-shopping trends, increasing digital payments, growing video streaming and soaring video game sales are slowly becoming the “new normal.” With these new trends gaining momentum, Internet will remain a major requirement in daily lives. More and more people are spending time at home, in line with social-distancing guidelines due to the pandemic. Against this backdrop, let’s look at some Internet ETFs that will consistently gain traction from the spurt in demand for online gaming, shopping, video streaming and remote working trends due to the coronavirus crisis: First Trust Dow Jones Internet Index FDN, ARK Next Generation Internet ETF ARKW, Invesco NASDAQ Internet ETF (PNQI), O’Shares Global Internet Giants ETF (OGIG) and Global X Internet of Things ETF (SNSR) (read: ETFs in Focus on Tesla (NASDAQ:TSLA)'s S&P 500 Debut).

Gold ETFs: Popular Safe-Haven Asset

The year 2020, majorly dominated by the coronavirus pandemic and geopolitical tensions, has been quite promising for safe-haven assets like gold. After peaking on safe-haven demand, gold lost its luster in recent months on the COVID-19 vaccine optimism. However, the recent surge in coronavirus cases, U.S.-China trade tensions and very easy global monetary policies will continue to provide some support. Moreover, weakness in U.S. dollar drove gold price higher. Gold ETFs mostly move in tandem with gold prices. The SPDR Gold Shares (NYSE:GLD) GLD, iShares Gold Trust IAU, SPDR Gold MiniShares Trust (GLDM) and GraniteShares Gold Trust (BAR) are some of the popular ETFs (read: Weekly ETF Roundup: U.S. Equity Attracts, Gold Loses).

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Bet on Low-Volatility ETFs

Demand for funds with “low volatility” or “minimum volatility” generally increases during tumultuous times. These seemingly-safe products usually do not surge in bull market conditions but offer protection against unpredictable ones. Providing more stable cash flow than the overall market, these funds are less cyclical in nature. Here are some options -- iShares Edge MSCI Min Vol USA ETF USMV, Invesco S&P 500 Low Volatility ETF SPLV, iShares Edge MSCI EAFE Minimum Volatility ETF (EFAV), iShares Edge MSCI Min Vol Global ETF (ACWV ), Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) (read: Defensive ETF Strategies to Sail Through Soaring COVID-19 Cases).

Want key ETF info delivered straight to your inbox?

Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

SPDR Gold Shares (GLD): ETF Research Reports

iShares Gold Trust (IAU): ETF Research Reports

iShares MSCI USA Min Vol Factor ETF (USMV): ETF Research Reports

WisdomTree U.S. Quality Dividend Growth ETF (DGRW): ETF Research Reports

ARK Next Generation Internet ETF (ARKW): ETF Research Reports

FlexShares Quality Dividend Defensive ETF (QDEF): ETF Research Reports

Invesco S&P 500 Low Volatility ETF (SPLV): ETF Research Reports

First Trust Dow Jones Internet ETF (FDN): ETF Research Reports

To read this article on Zacks.com click here.

Zacks Investment Research

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.