An ETF To Play Defense With...Or Not

In a market environment where risk appetite is waning, investors may want to consider playing defense. To be sure, there's a plethora of ETFs that look like alluring propositions. The iShares MSCI ACWI Index ACWI appears to be one candidate. In a "normal" market environment, ACWI would be a fine candidate to invest in. The ETF is well balanced, with its top-10 holdings accounting for less than 8% of the ETF's weight. Names like Exxon Mobil XOM, Apple AAPL, General Electric GE, Microsoft MSFT and Procter & Gamble PG are found among ACWI's top holdings, highlighting the ETF's conservative posture. However, what would appear to be an ETF that would keep investors away from market whims actually fails in that objective. In the past month, ACWI is down almost 8% compared to a 5% decline for the S&P 500. Certainly, ACWI's tenth largest holding, BP BP isn't helping matters, but BP finally has some good news to report on the Gulf of Mexico oil spill and that may make ACWI a decent one-day trade. That said, ACWI is a risk until equity markets resume their bullish tenor, though a long-term investor might be able to get comfortable here given that the ETF holds 722 stocks and has an expense ratio of just 0.35%. In addition, ACWI is among the iShares ETFs that Fidelity offers commission free to its clients, so that is one thing to consider. The Professor is lukewarm on this ETF, but it could be worth a look from a very short-term perspective or for investors looking to hold a basket of quality names for an extended time frame.