Market Roller Coaster Puts Smart Beta ETFs Back in Focus

Just when the capital markets were responding positively to the 25-basis point rate cut by the Federal Reserve, U.S. President Donald Trump’s imposition of tariffs sent the markets back down. Trump’s announcement that a 10 percent tariff would be applied to another $300 billion worth of Chinese goods, effective Sept. 1, sent the major indexes on a rollercoaster—a case for refocusing on smart beta exchange-traded funds (ETFs).

The Dow finished 300 points in the red following the rate cut announcement on Wednesday and then went up over 300 at the beginning of the following market session on Thursday. Following the tariff announcement, the Dow effectively erased its gains and fell over 300 points.

“Trade talks are continuing, and during the talks the U.S. will start, on September 1st, putting a small additional Tariff of 10% on the remaining 300 Billion Dollars of goods and products coming from China into our Country…We look forward to continuing our positive dialogue with China on a comprehensive Trade Deal, and feel that the future between our two countries will be a very bright one!” Trump tweeted further.

As such, it’s necessary for investors to have exposure to smart beta ETFs that have the ability to incorporate strategies that can capture gains on a market upswing and mute volatility by limiting losses during a downturn.

With the potential for volatility ahead, what ETPs are available in the marketplace that can address the concern for volatility risk while at the same time, realize any upward gains realized when markets rise? And what product can provide investors with the international exposure necessary for diversification?

One such product is the Natixis Seeyond International Minimum Volatility ETF (MVIN). MVIN focuses on developed markets and seeks to generate long-term capital appreciation with less volatility than typically experienced by international equity markets—the minimum volatility approach helps diminish portfolio risk.

MVIN gives investors:

• Less volatile approach to diversify internationally
• Long-term capital appreciation seeking less volatile international stocks
• Actively managed ETF with the ability to adapt over time

Even with U.S. equities rebounding from last year’s fourth-quarter tumult, it still makes sense to buy into a product like MVIN, which can provide investors with the duality of realizing gains during a market upswing and protect investors in a downturn.

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