5 ETFs to Battle the Bear

The S&P 500 is now down 12% from the 4/23 high and investors are beginning to move to “freak out” mode. They are selling first and asking questions later and this could lead to more short-term weakness. I feel eventually there will a great buying opportunity for high quality stocks and ETFs, but until that time arrives here are a few ETFs to help you protect the portfolio in the face of more selling. SPDRs Gold ETF GLD was down 0.7% on Thursday and has been weak the last few days after hitting an all-time high. However, GLD remains a “safe haven” play over time and should continue to outperform equities and give portfolios diversification. During the bear market it beat the market by over 80%. The Japanese Yen is a currency that generally moves higher as US equities fall. As the market fell over 3.5% yesterday, the Rydex CurrencyShares Japanese Yen ETF FXY rallied 2.1% and during the bear market it gained 20%. If bonds are more your speed, look at the Vanguard Intermediate-Term Bond ETF BIV. The maturities range from 5 to 10 years and it is made up of a mix between corporate and government issues. The current yield is 4.25%. Finally, if you really want safety there is the Market Vectors High-Yield Municipal Bond ETF HYD that invests the majority of its cash in “junk” municipal bonds. The current yield is 6.3% (tax-free). Depending on your tax rate, the tax equivalent yield could reach 9%. All four ETFs have there risks, however if you are in the market you always take a certain amount of risk. The key is the reward-to-risk ratio.