Wall Street Tumbles on Renewed Fears: 5 ETFs Standing Tall

U.S. stocks tumbled on Monday’s trading session, triggering another round of aggressive Fed rate hike speculation and sparking fears of a potential economic recession. After the best start to a third quarter since 1932, the S&P 500 saw the worst one-day drop of 2.1% in two months.

The Nasdaq Composite Index plunged 2.6%, while the Dow Jones Industrial Average was off 1.9%. Meanwhile, the CBOE Volatility Index, Wall Street’s fear gauge, jumped to 24.4, its highest in over two weeks (read: Utility ETFs Scaling New Highs).

Though terrible trading in the stock world pushed the ETF space into deep red on the day, a few ETFs still saw strength. These include ProShares VIX Short-Term Futures ETF VIXY, AdvisorShares Dorsey Wright Short ETF DWSH, Simplify Interest Rate Hedge ETF PFIX, AdvisorShares Ranger Equity Bear ETF HDGE and Simplify Tail Risk Strategy ETF CYA.

The decline in stocks came as the market is betting that Fed Chair Jerome Powell will turn hawkish to tamp down inflationary expectations and tighten financial conditions at the gathering later this week in Jackson Hole, WY. A top U.S. central bank official, James Bullard, commented that he is expecting a 75 bps interest rate hike at the central bank’s next policy meeting. According to the CME Group’s FedWatch tool, traders are pricing in a 56% chance of another three-quarter percentage point increase in the fall, while another 44% think that the Fed will go with a half-point hike.

Additionally, global worries started to hit investor sentiment. Russia’s Gazprom announcement that it would halt natural gas supplies to Europe for three days at the end of August took a toll on the stock market. High-growth and tech stocks, which were leading the recent rally, took a U-turn again as 10-yields rose past 3% for the first time since July 21 (read: Guide to High Dividend Paying ETFs).

Let’s dig into the detail of the above-mentioned ETFs:

ProShares VIX Short-Term Futures ETF (VIXY) – Up 6.5%

ProShares VIX Short-Term Futures ETF provides long exposure to the S&P 500 VIX Short-Term Futures Index, which measures the returns of a portfolio of monthly VIX futures contracts with a weighted average of one month to expiration.

ProShares VIX Short-Term Futures ETF has amassed $446 million in AUM and charges 85 bps in fees per year. The fund trades in an average daily volume of around 7.5 million shares.

AdvisorShares Dorsey Wright Short ETF (DWSH) – Up 3.9%

AdvisorShares Dorsey Wright Short ETF is an actively managed that short sells U.S. large-cap securities with the highest relative weakness within an investment universe primarily comprising large-capitalization U.S.-traded equities. It holds 104 stocks in its basket, with consumer discretionary taking the largest share at 22.8%, while energy and healthcare round off the next two spots.

AdvisorShares Dorsey Wright Short ETF trades in a good average daily volume of 126,000 shares and has accumulated $34 million in its asset base. It charges a higher annual fee of 3.68%.

Simplify Interest Rate Hedge ETF (PFIX) – Up 3.2%

Simplify Interest Rate Hedge ETF seeks to provide a hedge against a sharp increase in long-term interest rates and benefit from market stress when fixed-income volatility increases, while providing the potential for income. It buys put options on longer-term Treasury bonds to offer “the most liquid and the most cost-efficient way of getting interest rate protection.” Simplify Interest Rate Hedge ETF is the first ETF providing a simple, direct and transparent interest rate hedge (read: 5 ETFs That Gained Double Digits in Q2).

PFIX has accumulated $277.8 million in its asset base since its debut a year ago and trades in an average daily volume of 144,000 shares. It charges 50 bps in annual fees.

AdvisorShares Ranger Equity Bear ETF (HDGE) – Up 2.9%

AdvisorShares Ranger Equity Bear ETF is actively managed and seeks capital appreciation by taking short positions in a number of U.S.-listed companies with low earnings quality or aggressive accounting practices. The managers will look to identify earnings-driven events that could lead to price declines, such as downward earnings revisions or reduced forward guidance — the two factors that can spell trouble for a company. These securities with potentially weak fundamentals will underperform in a crumbling market, thereby resulting in strong profits for the fund.

AdvisorShares Ranger Equity Bear ETF has amassed $130.9 million in its asset base and is a bit pricey, charging 5.20% in annual fees. It trades in a volume of 176,000 shares a day, on average.

Simplify Tail Risk Strategy ETF (CYA) – Up 2.7%

Simplify Tail Risk Strategy ETF seeks to provide income and capital appreciation while protecting against significant downside risk to investors with hedging diversified portfolios against severe equity market selloffs. The fund deploys advanced option strategies that are designed to handle multiple types of market dislocations and be robust to path dependency.

Simplify Tail Risk Strategy ETF has amassed $73.8 million in its asset base and charges 50 bps in annual fees from investors. It trades in a volume of 85,000 shares a day on average.

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ProShares VIX ShortTerm Futures ETF (VIXY): ETF Research Reports
 
AdvisorShares Ranger Equity Bear ETF (HDGE): ETF Research Reports
 
AdvisorShares Dorsey Wright Short ETF (DWSH): ETF Research Reports
 
Simplify Interest Rate Hedge ETF (PFIX): ETF Research Reports
 
Simplify Tail Risk Strategy ETF (CYA): ETF Research Reports
 
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