Been seeing a disturbing amount of “World War 3” headlines in the news lately. Not surprising, given what’s going on.
Trump’s brinkmanship with tariffs and withdrawing support for Ukraine—which is now in its fourth year of a meat-grinder war with Russia.
Ongoing tensions in the Middle East, with Houthi attacks on shipping and the Israeli-Palestinian war escalating alongside Iran’s involvement.
China eyeing Taiwan. And now, even Western Balkan stability is under fire as Serbia deals with protests and nationalist movements.
It’s hard not to be reminded of Otto von Bismarck’s 1888 quote: "One day the great European War will come out of some damned foolish thing in the Balkans."
Yeah, I know—“nothing ever happens.” But that doesn’t stop some people from worrying about it. So, I figured, hey—why not turn that anxiety into a thought exercise starring ETFs?
Specifically, if war broke out, and somehow, I—a 29-year-old man with previous military experience—wasn’t drafted and still had capital and income to invest, what ETFs would be the safest to own?
Gold bullion ETFs
Gold has had a banner 2024 and year to date, recently breaking the $3,000 per ounce mark—a real sign of the times.
Despite owning a few gold bars I impulsively bought at Costco (NASDAQ:COST) a while ago, I still think a gold ETF is the best option for most investors. Sure, you can’t fondle and admire them, but you also avoid dealer spreads, storage hassles, and insurance costs.
More importantly, a gold ETF lets you rebalance easily—selling high to buy stocks during market routs instead of having to offload physical bars at some shady coin shop.
Gold would likely be a safe haven asset during war, for the same reason it’s been a safe haven for thousands of years. Central banks hoard it as a reserve asset, and its absurdly long track record of holding value dates back to Roman legionnaires being paid in it.
When things get chaotic, gold tends to rise, simply because enough people still believe in it as a safe haven asset that can’t be debased unlike fiat currency.
For gold exposure, I prefer the abrdn abrdn Physical Gold Shares ETF (NYSE:SGOL). It’s physically backed with allocated metal that meets LBMA Good Delivery rules, meaning every ounce held actually exists in a vault.
It’s also inspected twice a year by Inspectorate International, with one of those inspections happening at random—a level of verification some other gold ETFs don’t bother with.
The 0.17% expense ratio isn’t the lowest in the market, but it’s reasonable given the security and oversight. If I needed a hedge against financial and geopolitical chaos, SGOL would be my go-to.
Swiss equity ETFs
The issue with gold is that, in the long run, it doesn’t produce tangible cash flows. It’s not buying back shares like companies do, it doesn’t grow earnings, and it won’t pay you dividends. It’s just gold sitting there.
So, while I want some exposure to equities, even in a worst-case war scenario, I’m going to be selective. There’s no point in investing in a country that’s gearing up for war or getting gutted by conflict.
And no, I’m not piling into the defense sector. The time to buy that trade was two years ago. Right now, defense stocks are extremely overvalued on both the U.S. and European side. If a major war actually breaks out, it’s probably a sell-the-news event for these stocks, not some golden opportunity.
Instead, I’m going with Swiss equities. In my humble opinion, Switzerland’s stock market is likely to be one of the most resilient in a global conflict.
The country’s longstanding neutrality—backed by political, geographical, and economic factors—makes it an attractive haven. It’s politically stable, has strong institutions, and sits on a mountain range that has kept it largely untouchable for centuries.
Moreover, Switzerland is not a NATO member, meaning it’s not bound by Article 5, which would drag it into a global conflict if another NATO country is attacked. That alone makes Swiss stocks a safer bet than most European markets if things spiral.
For Swiss equities, I like the Franklin FTSE Switzerland ETF (NYSE:FLSW). It’s cheaper than iShares MSCI Switzerland ETF (NYSE:EWL)), which charges 0.50%, while FLSW costs just 0.09%.
It tracks the FTSE Switzerland Capped Index, giving exposure to 53 Swiss stocks, weighted by market cap. The portfolio is dominated by healthcare, financials, and consumer giants, including Nestle SA (SIX:NESN), Roche Holding AG (OTC:RHHVF) Participation (SIX:ROG), Novartis (SIX:NOVN), UBS Group AG (NYSE:UBS), Richemont (SIX:CFR), and Swiss Re (OTC:SSREY).
FLSW pays semi-annual distributions, and with a 1.82% trailing 12-month yield, you’re getting some income, although it’s not the most tax-efficient. Still, as far as war-proof equity exposure goes, Switzerland is about as good as it gets.