Canada markets open in 7 hours 48 minutes

ETF Areas That Can Stay Strong Amid Covid-19 Outbreak

Sweta Jaiswal, FRM

Coronavirus, now officially known as Covid-19, continues to wreak havoc, with the death toll risingto more than 2000 globally and the number of confirmed cases crossing the 75,000 mark. Globally, the coronavirus has spread to around 28 countries, with the maximum cases observed in Singapore, Japan, Hong Kong and South Korea. Also, around 545 cases outside Mainland China are linked to the Diamond Princess cruise ship that has been docked in Yokohama, Japan (read: Coronavirus Puts These Country ETFs on High Alert).

Leading companies have issued estimates of the virus’ impact on the global economy. Per Moody’s Analytics and Barclays, the coronavirus outbreak will dent global GDP by 0.3% in 2020. Meanwhile, analysts at Oxford Economics  predict a 0.2% drop in the current year. A special briefing published by the global business research firm Dun & Bradstreet noted that the coronavirus outbreak could impact more than 5 million businesses globally. The data also states that about half (49%) of the companies, with subsidiaries operating in coronavirus-impacted regions in China, have headquarters in Hong Kong, whereas, 19% belong to the United States, 12% to Japan and 5% in Germany.

According to the latest reports, Japan’s economy shrunk1.6% in fourth-quarter 2019 for an annualized decline of 6.3%, triggering fears of a recession in the days to come. The third largest global economy has been further pushed to the brink of a slump by the coronavirus outbreak in China. Moreover, Apple Inc. AAPL recently warned its investors of the impact of the deadly coronavirus outbreak on its business and has therefore, trimmed sales expectations for this quarter (read: Coronavirus to Hurt Apple Earnings: Time to Buy These ETFs?).

ETF Areas Staying Strong

Given the situation, let’s look at some ETF areas that investors can follow for a smooth sail in these turbulent times.


Real estate investment trusts (REITs) had a bullish run on the bourses in 2019. A dovish Fed can be cited as the main driving factor. When interest rate drops, mortgage rates fall, making real estate or refinancing mortgages more affordable. This, in turn, boosts real estate sales. These funds offer outsized yields and act as good investing options, when increased safe-haven trades keep yields at check. In view of this, investors can consider ETFs like JPMorgan BetaBuilders MSCI US REIT ETF BBRE, iShares Core U.S. REIT ETF USRT, Nuveen Short-Term REIT ETF NURE, Invesco S&P 500 Equal Weight Real Estate ETF EWRE and Schwab U.S. REIT ETF SCHH  (read: What's Behind the Recent Rally in Real Estate ETFs?).

Precious Metal ETFs

Prices of precious metals like gold and silver flare up during chaotic market conditions. This enhances the appeal of iShares Silver Trust SLV, Invesco DB Silver Fund DBS, SPDR Gold Trust ETF GLD, iShares Gold Trust IAU  and Aberdeen Standard Physical Palladium Shares ETF PALL (read: Precious Metal ETFs & Stock Sizzling This Valentine's Day).

Utilities ETF

The sector is among the most stable for the long term, as its players are likely to offer decent returns, irrespective of market conditions. It is known for its non-cyclical nature and acts as a safe haven for investors during erratic stock-market conditions. In addition, utilities act as a defensive option to stay invested in more rewarding equity markets. Thus, investors can look at The Utilities Select Sector SPDR Fund XLU, Vanguard Utilities ETF VPU, iShares U.S. Utilities ETF IDU and Fidelity MSCI Utilities Index ETF FUTY (read: ETFs to Buy as Utilities Are Favored Amid Virus Scare).

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 >>

Click to get this free report Apple Inc. (AAPL) : Free Stock Analysis Report SPDR Gold Shares (GLD): ETF Research Reports iShares Gold Trust (IAU): ETF Research Reports Utilities Select Sector SPDR ETF (XLU): ETF Research Reports iShares Silver Trust (SLV): ETF Research Reports Vanguard Utilities ETF (VPU): ETF Research Reports Fidelity MSCI Utilities Index ETF (FUTY): ETF Research Reports Invesco DB Silver ETF (DBS): ETF Research Reports Schwab U.S. REIT ETF (SCHH): ETF Research Reports Invesco S&P 500 Equal Weight Real Estate ETF (EWRE): ETF Research Reports iShares U.S. Utilities ETF (IDU): ETF Research Reports Aberdeen Standard Physical Palladium Shares ETF (PALL): ETF Research Reports iShares Core U.S. REIT ETF (USRT): ETF Research Reports Nuveen Short-Term REIT ETF (NURE): ETF Research Reports Barnes Group, Inc. (B) : Free Stock Analysis Report To read this article on 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