5 Top Smart-Beta ETF Charts Amid Trade Tensions

 | Jun 11, 2019 01:00AM ET

There has been a tectonic shift in ETF launches over the last few years. The tactics of plain-vanilla bond ETFs does not seem to work anymore, compelling issuers to focusing more on active and smart-beta ETFs.

This is because the financial landscape has changed drastically since the financial crisis. The central banks are adopting pretty divergent monetary policies. Oil prices have been seesawing over the last five years. Geopolitical risks have scaled up. Trade war tensions have creeped in and are likely to deal a blow to global economic growth in the coming days.

So, fund issuers have to make their products saleable amid uncertainties. The products need to be aligned with the above-said economic and geopolitical issues. So, the rollout of smart-beta or multi-factors is rampant. These products normally have the ability to cut losses during difficult times to some extent, if not completely avert them.

For instance, SPDR S&P 500 ETF (NYSE:SPY) (ASX:SPY) is up 15.6% this year, while SPDR Portfolio S&P 500 Growth ETF FTSE Russell . The adoption of multi-factor has more than tripled (71%) in the last four years.

Investors should note that the past month has been fraught with trade tensions between the United States and China as well as Mexico. Though the conflict with Mexico has cooled down of late, things with China are yet to be resolved. The S&P 500-based fund SPY is up 0.3% in the past month (as of Jun 10, 2019).

Against this backdrop, investors may be interested to find out which smart-beta ETFs have navigated trade tantrums in the past month and have managed to beat the broader market by a wide margin. We have presented charts for the winning ETFs comparing them with the broader market ETF SPY and with the concerned sectors’ biggest funds.

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