4 Safe ETFs to Invest to Counter Global Financial Market Crisis
Concerns about the U.S. banking sector prolonged this week and affected global markets despite measures by U.S. regulators to counter the fallout from Silicon Valley Bank (SVB)’s failure. Last week, Silicon Valley Bank announced it was planning to raise $2 billion to solidify its financial position. Its startup clients were withdrawing their deposits. The very news crashed SVB stock, sending ripple effects across the banking industry.
While SVB failed to raise the cash, US regulators shut the bank down. It is the second-largest bank failure in U.S. history. Then, on Friday, Signature Bank customers withdrew more than $10 billion in deposits, leading the U.S. regulators to seize Signature Bank in third-biggest bank failure in U.S. history. The contagion spread into other banks like First Republic Bank which dropped more than 60% yesterday.
The crisis shook the global markets also as European equities slumped yesterday the most since mid-December, continuing Friday’s decline. Like U.S. banking, European banking sector was hit the most. In United States, Comerica Inc., Zions Bancorp and KeyCorp were prominent decliners. In Europe, Commerzbank AG, Banco de Sabadell SA and UniCredit SpA were among the biggest losers. Credit Suisse shares suffered too due to ‘material weaknesses’ found in financial reporting.
Despite U.S. regulatory authorities’ extraordinary efforts to shore up confidence in the financial system, investors continued to look for weaklings of the market. Asia-Pacific markets tumbled too.
Against this backdrop, below-mentioned ETFs are worth investing.
ETFs in Focus
iShares Core U.S. Aggregate Bond ETF AGG
The Fed is scheduled to meet on Mar 22. But traders reduced their bets on interest-rate hikes due to the banking crisis. Hence, bonds jumped globally. The underlying Bloomberg US Aggregate Bond Index measures the investment grade, US dollar denominated, fixed rate taxable bond market. The fund charges 3 bps in fees and yields 2.52% annually.
iShares International Treasury Bond ETF IGOV
Since the financial market crisis rattled global investors’ confidence, investing in international treasuries seem to be a great idea. Treasuries are considered to be one of the safest assets in any region. The underlying FTSE World Government Bond Index - Developed Markets Capped comprises of non-U.S. developed market government bonds.
VanEck Gold Miners ETF GDX
Gold is considered to be a safe as well as inflation-protected asset. If the pace of Fed rate hike slows, the U.S. dollar is likely to decline ahead. Invesco DB US Dollar Index Bullish Fund UUP has declined 1.6% past week due to the banking crisis. If the greenback falls, gold prices will gain as the metal is priced in the U.S. dollar. And gold mining stocks are considered leveraged plays of the underlying metal.
Invesco CurrencyShares Japanese Yen Trust FXY
The Japanese currency ETF has been an area to watch lately as investors are flocking to safe havens amid heightened uncertainty and volatility. In particular, yen is considered a safe haven currency in times of uncertainty.
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Invesco CurrencyShares Japanese Yen Trust (FXY): ETF Research Reports
Invesco DB US Dollar Index Bullish ETF (UUP): ETF Research Reports
VanEck Gold Miners ETF (GDX): ETF Research Reports
iShares Core U.S. Aggregate Bond ETF (AGG): ETF Research Reports
iShares International Treasury Bond ETF (IGOV): ETF Research Reports
