Fear has begun to mount surrounding global trade wars spurred by commentary from U.S. President Donald Trump that new tariffs will be placed on goods coming from China, the European Union and allies such as Canada. For those worried that a trade war with any of these regions is on the horizon, exchange traded funds (ETFs) focused on industrials and other “safe” economic sectors (or those which are likely to be less impacted by such legislation) are once again catching the eye of investors looking for a safer place to put their money.
One ETF which has seen significant volume in recent days is the iShares U.S. Industrials ETF (NYSE:IYJ), as this fund has a subset of holdings which investors largely believe will be immune to trade-related concerns.
This fund’s core holdings include a number of defensive stocks in sectors such as defense and aerospace, sectors which have been on a continued run since Trump took office in 2016, and those which are likely to continue to see U.S. government support moving forward.
Shares of ETFs tracking broader agricultural sectors such as corn and soybeans have taken a hit, following news of retaliatory tariffs likely to be imposed by global powers such as China.
With trade rhetoric largely turning into action in recent weeks, investors are likely to continue this trading trend, with long-term projections for potentially impacted sectors likely to see additional revaluation as investors re-price the long-term cash flows from said sectors. Invest accordingly.
Invest wisely, my friends.
