Non-Cyclical Stock ETFs for Conservative Investors | ETF Trends

We are nearing that time when the age-old market adage “sell in May and go away” could come into play. With market volatility usually spiking to seasonal highs during the summer months, as witnessed over the past few years, investors may want to start thinking about safer equities and stock exchange traded fund options.

During times of corrective activity and heightened uncertainty, non-cyclical stock ETFs have outperformed the market, writes Gary Gordon for ETF Expert.

If you are firmly siding with the bull camp and believe cyclical sectors like financials, tech, energy, consumer discretionary and industrials will continue to perform, then you won’t be rebalancing. However, if you think the bear will soon rear its angry head, then you should be fully situated in safe haven investments like money market cash equivalents, short-term treasuries and the Japanese yen.

Still, for those who believe that the markets will experience bouts of volatility and exhibit a trendless behavior while sticking to a bullish trajectory, investors may use income-generating, non-cyclical ETF plays, Gordon suggests. [Ups and Downs of Low-Volatility ETFs]

  • iShares High Dividend Equity Fund (NYSEArca: HDV). The fund allocates 29% of its portfolio to non-cyclical pharmaceuticals and offers a 30-day SEC yield of 3.7%.
  • PowerShares S&P 500 Low Volatility (NYSEArca: SPLV). This quick up-and-comer has garnered over $1 billion in assets in just under a year after launching. The ETF is following a strong technical uptrend and offers an anticipated yield of over 3%. SPLV tracks 100 stocks from the S&P 500 with the lowest realized volatility over the past year, such as consumer staples, utilities and health care stocks. [Low-Volatility ETFs: Wait For Full Market Cycle?]

iShares High Dividend Equity Fund

For more information on market volatility, visit our volatility category.

Max Chen contributed to this article.

The opinions and forecasts expressed herein are solely those of Tom Lydon, and may not actually come to pass. Information on this site should not be used or construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any product.