Market maven and CNBC’s “Mad Money” host Jim Cramer is looking at the charts of the S&P 500 as well as the CBOE Volatility Index and gave credence to Option Pit trading education firm founder Mark Sebastian–he confirmed Sebastian’s reading of the charts and that a pullback in stocks could be near.
May’s volatility shower from a U.S.-China trade deal gone sour made way for a bounce in the beginning of June, but that could all change.
“This action tells Sebastian that the fun may be over, at least for the moment,” Cramer said. “The Volatility Index refusing to go much lower is a problem. It means you need to be careful when you see the averages rallying like [they did]this morning, because those gains could be rolled back.”
Investors can counter this pull back with funds that focus on low volatility.
In today’s market environment, investors are tilting their preferences to defense and low volatility. As such, exchange-traded funds (ETFs) that can fill these voids are best served piping hot to investors hungry for safe haven securities.
Here are three defensive ETFs to consider:
- Invesco S&P 500 Low Volatility ETF (SPLV): SPLV seeks to invest at least 90% of its total assets in common stocks that comprise the Index. The Index is compiled, maintained and calculated by Standard and Poor’s and consists of the 100 stocks from the SP 500 Index with the lowest realized volatility over the past 12 months. Volatility is a statistical measurement of the magnitude of up and down asset price fluctuations over time. The Fund and the Index are rebalanced and reconstituted quarterly in February, May, August and November.
- SPDR S&P 500 ETF (NYSEArca: SPY): SPY seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500 Index. The Trust seeks to achieve its investment objective by holding a portfolio of the common stocks that are included in the index, with the weight of each stock in the Portfolio substantially corresponding to the weight of such stock in the index.
- iShares Edge MSCI Minimum Volatility USA ETF (USMV): USMV seeks the investment results of the MSCI USA Minimum Volatility (USD) Index. The fund will invest at least 90% of its assets in the component securities of the index and may invest up to 10% of its assets in certain futures, options and swap contracts, cash and cash equivalents. The index measures the performance of large and mid-capitalization equity securities listed on stock exchanges in the U.S. that, in the aggregate, have lower volatility relative to the broader U.S. equity market.
For more market trends, visit ETF Trends.