The second theme involves buying stimulus-driven stock ETFs. WisdomTree India (EPI) has been a tremendous beneficiary of its own country’s unexpected rate cut activity, while iShares Currency Hedged Germany (HEWG) should benefit from the markedly lower euro and the negligible German bund yields that push investors into German equities.
Third, investors should continue to hold prominent U.S. equity ETFs for as long as they are still working for them. I still maintain an allegiance to SPDR Select Health Care (XLV), iShares USA Minimum Volatility (USMV) as well as Vanguard High Dividend Yield (VYM). If any of these positions break below a 200-day moving average, however, I would insure against further depreciation by selling the position or increasing exposure to the index that my colleague and I created, the FTSE Custom Mutli-Asset Stock Hedge Index. One can already see the benefits of multi-asset stock hedging over 1 months, 3 months, 6 months and 1 year, where the combination of certain currencies, commodities, foreign sovereign debt and U.S. bonds are achieving desirable results.