Virus Erases $1.7T From Wall Street: Play Multi-Asset ETFs

China’s coronavirus outbreak is taking an uglier shape than initially apprehended. The virus is spreading fast, with new cases being reported by countries outside the epicenter. South Korea, Thailand and Japan in Asia have been weak spots, while Italy and Spain in Europe and some Middle-East countries are also reporting confirmed cases (read: Can South Korean ETFs Survive the Covid-19 Havoc?).

The fast spread of the virus outside China has unnerved global investors lately. The S&P 500 lost about $1.737 trillion of its value over the first two days of this week, according to S&P Dow Jones Indices. The equity benchmark shed about $810 billion on Feb 26, adding to its $927-billion loss on Feb 25, according to the firm’s Senior Index Analyst Howard Silverblatt. It’s down $2.138 trillion since last Wednesday’s high, per the source.

While the market’s long-term fundamentals did not change, investors may want to limit equity exposure in the near term. At the start of the month, JPMorgan (NYSE:JPM) Chase’ analysts recommended “reining in portfolio risk with a cut in active equity weights to 5% from 7% and an increase in corporate bonds to minus 5% from minus 7%” as they expected an acceleration in coronavirus cases.

In this regard, we highlight a few multi-asset ETFs that could help investors gain exposure to a diversified approach. Notably, the multi-asset strategy looks to boost returns and lower volatility in portfolios.

These products normally provide a high level of current income and take care of downside risks of a specific asset class. These also cater to various asset classes (equity, fixed income and alternative securities), which have low correlation to each other. So, even if there are selloffs in these ETFs, decent current income make up for the capital losses (read: Pick These US Small-Cap ETFs to Fight the Coronavirus Scare).

Direxion Flight to Safety Strategy ETF FLYT

This new ETF is active and does not track a benchmark. It looks to deliver an approach to portfolio risk mitigation from equity market downturns while also providing long-term appreciation potential. It is a mixture of utilities stocks (32.71%), bonds (44.91%) and gold bullion (22.38%). It charges 40 bps in fees. The fund hit the market this month (read: Gold to Hit $2000 Soon? ETFs to Bet On).

iShares Core Moderate Allocation ETF AOM

The fund intends to represent a moderate target risk allocation strategy. It is designed to measure risk-adjusted exposure to a diversified array of financial assets. The fund invests about 59.1% in fixed income and 39.95% in equities. It charges 25 bps in fees and yields 2.65% annually.

iShares Morningstar Multi-Asset Income ETF IYLD

The fund puts 60% in bonds, 20% in stocks and 20% in alternative income sources. The product yields about 4.94% annually. The United States takes the top spot, with 53.37% allocation followed by 2.67% in United Kingdom and 2.42% in Russia.

Amplify High Income ETF YYY

The underlying ISE High Income Index is comprised of 30 closed-end funds ranked highest overall by the ISE in three criteria: fund yield, discount to net asset value and liquidity. Its expense ratio is 2.28% and yields 8.77% annually. Bonds have about 82% exposure, while 18% of the fund goes to stocks. CEF issuers like BlackRock (NYSE:BLK), Legg Mason, Eaton (NYSE:ETN) Vance, Prudential (LON:PRU) and Nuveen get prominence in the fund.

Arrow Dow Jones Global Yield ETF GYLD

The underlying Dow Jones Global Composite Yield Index seeks to identify the 150 highest yielding investable securities in the world within Equity, Sovereign Debt, Corporate Debt, Real estate & Global Alternatives. It charges 75 bps in fees and yields 8.63% annually.

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 >>