The economic ramifications of the coronavirus pandemic are just starting to take its toll and once the smoke clears, some are forecasting that the global economy could incur an $8.8 trillion hit.
“The coronavirus pandemic could cost the global economy between $5.8tn and $8.8tn (£4.7tn-£7.1tn), according to Asian Development Bank (ADB),” a BBC News article noted. “That’s more than double last month’s prediction and equates to 6.4%-9.7% of the world’s economic output. It comes as measures to slow the spread of Covid-19 continue to paralyze economic activity around the world.”
“This new analysis presents a broad picture of the very significant potential economic impact of Covid-19,” the ADB’s chief economist Yasuyuki Sawada said.
“It also highlights the important role policy interventions can play to help mitigate damage to economies,” he added.
During a global recession, U.S. equities can serve as an investor safe haven, which
creates an opportunity for investors to capitalize on the Direxion FTSE Russell US Over International ETF (NYSEArca: RWUI).
- Seeks investment results, before fees and expenses, that track the Russell 1000®/FTSE All-World ex-US 150/50 Net Spread Index (the “index”).
- The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in securities that comprise the Long Component of the index or shares of ETFs on the Long Component of the index.
- The index measures the performance of a portfolio that has 150% long exposure to the Russell 1000® Index (the “Long Component”) and 50% short exposure to the FTSE All-World ex-US Index (the “Short Component”).
Investors looking to play the other side with weakness in the U.S. equities market can use the Direxion FTSE International Over US ETF (NYSEArca: RWIU) to capitalize on international equities will outdoing U.S. equities. RWIU seeks investment results, before fees and expenses, that track the FTSE All-World ex-US/Russell 1000 150/50 Net Spread Index, which measures the performance of a portfolio that has 150 percent long exposure to the FTSE All-World ex-US Index and 50 percent short exposure to the Russell 1000® Index.
One ETF to consider for getting international diversification via small cap equities is the SPDR S&P International Small Cap ETF (NYSEArca: GWX). The fund seeks investment results that correspond generally to the total return performance of the S&P Developed Ex-U.S. under USD2 Billion Index, which is a market capitalization-weighted index designed to define and measure the investable universe of publicly traded small-cap companies, as defined by the index, domiciled in developed countries outside the United States.
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