We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
5 ETF Areas to Consider Amid the Ukraine-Russia War Saga
Read MoreHide Full Article
Wall Street has just wrapped up a dull February as the three major indices ended the month in the red. Immense volatility has also been observed on the bourses. The Russia-Ukraine war saga continues as talks between the representatives of the countries ended without any strong resolution. At the same time, reports state that Russia continues to attack Ukraine while the latter’s soldiers and civilians are trying to resist the invasion in key cities. A BBC report states that satellite images show that about a 40-mile-long convoy of Russian armor is moving toward Ukraine's capital Kyiv.
In response to the invasion, the sanctions on Moscow continue to pile up. The European Union has informed about imposing sanctions against more than two dozen Russians, including President Vladimir Putin’s press secretary (per a CNBC article). These sanctions have been imposed aiming at the oil oligarchs, Kremlin officials, propagandists, military figures and bankers that play influential roles in supporting Moscow’s economy.
There is no doubt that Kremlin’s move is being widely condemned by global leaders, military specialists and grassroots protesters along with leading to fierce outrages. Even their local people are not supporting Russia’s move.
Going by the data issued by Ukraine’s Ministry of Foreign Affairs on Feb 28, Russian forces witnessed great losses of about 4,500 personnel, almost 200 tanks and approximately 60 aircraft.
Against this backdrop, let’s take a look at some ETF areas that can be good investment options amid the Russia-Ukraine conflict:
Commodity ETFs
The Russia-Ukraine geopolitical tensions have put the global commodity markets on edge. There is no denying that Russia and Ukraine hold important positions as producers in the global commodities market. Thus, the escalation in tensions has sparked a rally in a broad range of commodities.
The latest developments can slow down production activities and impact the export of commodities and goods. This is true as the tensions have led to supply-disruption fears in an already-tight commodity market. A surge in prices of crude, natural gas, grains and metals has already been witnessed.
It is important to note that commodity ETFs mostly hold futures and there could be roll costs or yields involved. Therefore, these ETFs are more suitable for short-term trading or hedging activities.
Here are some commodity ETFs that can be considered as the geopolitical crisis worsens: Teucrium Wheat Fund (WEAT - Free Report) , iShares S&P GSCI Commodity-Indexed Trust (GSG - Free Report) , Teucrium Corn Fund (CORN) and First Trust Global Tactical Commodity Strategy Fund (FTGC) (read: Russia-Ukraine Tensions Flare Up: ETF Strategies to Win).
Quality ETFs
Quality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility and high margins. These stocks also have a track record of stable or increasing sales and earnings growth. In comparison to plain vanilla funds, these products help lower volatility and perform rather well during market uncertainty. Further, academic research has proven that high-quality companies constantly provide better risk-adjusted returns than the broader market over the long term.
Given this, we have highlighted some ETFs like iShares MSCI USA Quality Factor ETF (QUAL - Free Report) , Invesco S&P 500 Quality ETF (SPHQ - Free Report) , FlexShares Quality Dividend Index Fund (QDF), SPDR MSCI USA StrategicFactors ETF (QUS) and Barron's 400 ETF (BFOR) targeting this niche strategy. These could enjoy smooth trading and generate market-beating returns in the current market environment (read: 4 ETFs to Invest in on Rising Market Volatility).
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 more protection than the unpredictable ones. Providing more stable cash flow than the overall market, these funds are less cyclical in nature. Here are some options -- iShares MSCI USA Min Vol Factor ETF (USMV - Free Report) , Invesco S&P 500 Low Volatility ETF (SPLV - Free Report) , iShares MSCI Global Min Vol Factor ETF (ACWV) and Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) (read: 5 Low-Volatility ETFs to Bet on Rising Worries).
Oil ETFs
Oil prices have been rallying amid the Russia-Ukraine geopolitical crisis as the oil futures prices rose to a more than seven-year high on Feb 28. Russia’s move is leading to a rise in oil prices as it is among the world’s largest suppliers of oil and natural gas. Russia is the world’s second-largest oil producer. European refineries procure most of their crude oil supplies from Russia. Notably, Russia also provides about two-fifths of its natural gas supply to Europe. In fact, Russia emerged as the largest natural gas and oil supplier to the European Union in 2021. Not only crude oil but the prolonged war between Ukraine and Russia can also result in constrained supplies of edible oil.
Against this backdrop, investors can take a closer look at the oil commodity space and its related ETFs like United States Oil Fund (USO - Free Report) , Invesco DB Oil Fund (DBO - Free Report) , United States Brent Oil Fund (BNO) and United States 12 Month Oil Fund (USL) (see all Energy ETFs here)
Cybersecurity ETFs
Investors are paying great attention to cybersecurity stocks as these have been rallying amid the rising panic of cyberattacks. Market experts have warned about the possibility of cyberattacks by Russia in retaliation to Western sanctions. The West has been continuing to isolate Moscow by imposing several sanctions on Russian banks, its sovereign debt along with Russian President Vladimir Putin and Foreign Minister Sergey Lavrov. Notably, cyberattacks can be part of Russia’s war strategy. Several Ukrainian entities were hacked last week. Also, the increasing adoption of revolutionary technologies is exposing businesses, governments and organizations to cyber risks.
Investors seeking to tap the boom in the cyber security market could consider the following ETFs: ETFMG Prime Cyber Security ETF (HACK - Free Report) , First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report) , Global X Cybersecurity ETF (BUG) and iShares Cybersecurity and Tech ETF (IHAK).
See More Zacks Research for These Tickers
Normally $25 each - click below to receive one report FREE:
Image: Bigstock
5 ETF Areas to Consider Amid the Ukraine-Russia War Saga
Wall Street has just wrapped up a dull February as the three major indices ended the month in the red. Immense volatility has also been observed on the bourses. The Russia-Ukraine war saga continues as talks between the representatives of the countries ended without any strong resolution. At the same time, reports state that Russia continues to attack Ukraine while the latter’s soldiers and civilians are trying to resist the invasion in key cities. A BBC report states that satellite images show that about a 40-mile-long convoy of Russian armor is moving toward Ukraine's capital Kyiv.
In response to the invasion, the sanctions on Moscow continue to pile up. The European Union has informed about imposing sanctions against more than two dozen Russians, including President Vladimir Putin’s press secretary (per a CNBC article). These sanctions have been imposed aiming at the oil oligarchs, Kremlin officials, propagandists, military figures and bankers that play influential roles in supporting Moscow’s economy.
There is no doubt that Kremlin’s move is being widely condemned by global leaders, military specialists and grassroots protesters along with leading to fierce outrages. Even their local people are not supporting Russia’s move.
Going by the data issued by Ukraine’s Ministry of Foreign Affairs on Feb 28, Russian forces witnessed great losses of about 4,500 personnel, almost 200 tanks and approximately 60 aircraft.
Against this backdrop, let’s take a look at some ETF areas that can be good investment options amid the Russia-Ukraine conflict:
Commodity ETFs
The Russia-Ukraine geopolitical tensions have put the global commodity markets on edge. There is no denying that Russia and Ukraine hold important positions as producers in the global commodities market. Thus, the escalation in tensions has sparked a rally in a broad range of commodities.
The latest developments can slow down production activities and impact the export of commodities and goods. This is true as the tensions have led to supply-disruption fears in an already-tight commodity market. A surge in prices of crude, natural gas, grains and metals has already been witnessed.
It is important to note that commodity ETFs mostly hold futures and there could be roll costs or yields involved. Therefore, these ETFs are more suitable for short-term trading or hedging activities.
Here are some commodity ETFs that can be considered as the geopolitical crisis worsens: Teucrium Wheat Fund (WEAT - Free Report) , iShares S&P GSCI Commodity-Indexed Trust (GSG - Free Report) , Teucrium Corn Fund (CORN) and First Trust Global Tactical Commodity Strategy Fund (FTGC) (read: Russia-Ukraine Tensions Flare Up: ETF Strategies to Win).
Quality ETFs
Quality stocks are rich in value characteristics with a healthy balance sheet, high return on capital, low volatility and high margins. These stocks also have a track record of stable or increasing sales and earnings growth. In comparison to plain vanilla funds, these products help lower volatility and perform rather well during market uncertainty. Further, academic research has proven that high-quality companies constantly provide better risk-adjusted returns than the broader market over the long term.
Given this, we have highlighted some ETFs like iShares MSCI USA Quality Factor ETF (QUAL - Free Report) , Invesco S&P 500 Quality ETF (SPHQ - Free Report) , FlexShares Quality Dividend Index Fund (QDF), SPDR MSCI USA StrategicFactors ETF (QUS) and Barron's 400 ETF (BFOR) targeting this niche strategy. These could enjoy smooth trading and generate market-beating returns in the current market environment (read: 4 ETFs to Invest in on Rising Market Volatility).
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 more protection than the unpredictable ones. Providing more stable cash flow than the overall market, these funds are less cyclical in nature. Here are some options -- iShares MSCI USA Min Vol Factor ETF (USMV - Free Report) , Invesco S&P 500 Low Volatility ETF (SPLV - Free Report) , iShares MSCI Global Min Vol Factor ETF (ACWV) and Invesco S&P 500 High Dividend Low Volatility ETF (SPHD) (read: 5 Low-Volatility ETFs to Bet on Rising Worries).
Oil ETFs
Oil prices have been rallying amid the Russia-Ukraine geopolitical crisis as the oil futures prices rose to a more than seven-year high on Feb 28. Russia’s move is leading to a rise in oil prices as it is among the world’s largest suppliers of oil and natural gas. Russia is the world’s second-largest oil producer. European refineries procure most of their crude oil supplies from Russia. Notably, Russia also provides about two-fifths of its natural gas supply to Europe. In fact, Russia emerged as the largest natural gas and oil supplier to the European Union in 2021. Not only crude oil but the prolonged war between Ukraine and Russia can also result in constrained supplies of edible oil.
Against this backdrop, investors can take a closer look at the oil commodity space and its related ETFs like United States Oil Fund (USO - Free Report) , Invesco DB Oil Fund (DBO - Free Report) , United States Brent Oil Fund (BNO) and United States 12 Month Oil Fund (USL) (see all Energy ETFs here)
Cybersecurity ETFs
Investors are paying great attention to cybersecurity stocks as these have been rallying amid the rising panic of cyberattacks. Market experts have warned about the possibility of cyberattacks by Russia in retaliation to Western sanctions. The West has been continuing to isolate Moscow by imposing several sanctions on Russian banks, its sovereign debt along with Russian President Vladimir Putin and Foreign Minister Sergey Lavrov. Notably, cyberattacks can be part of Russia’s war strategy. Several Ukrainian entities were hacked last week. Also, the increasing adoption of revolutionary technologies is exposing businesses, governments and organizations to cyber risks.
Investors seeking to tap the boom in the cyber security market could consider the following ETFs: ETFMG Prime Cyber Security ETF (HACK - Free Report) , First Trust NASDAQ Cybersecurity ETF (CIBR - Free Report) , Global X Cybersecurity ETF (BUG) and iShares Cybersecurity and Tech ETF (IHAK).