The key U.S. indexes’ spectacular 2019 rally faltered in the New Year as the latest Middle East tensions triggered concerns of a war. It all started with a New Year Eve attack by Iran-backed militias on the U.S. Embassy in Baghdad, which was retaliated by a U.S. drone strike near the Baghdad international airport that killed an Iranian military leader.
The U.S. move then faced a counter retaliation in the form of a missile strike by Iran at the American bases in Iraq on Jan 7. After this, the aftermath of the U.S. air strike was the passage of a resolution at the Iraqi parliament that demanded expulsion of all foreign troop’s present and Iran’s pulling back from the 2015 nuclear deal(read: Good Tidings Await Oil in 2020: 5 Soaring Energy ETFs).
Wall Street recorded losses, reacting to the news of Iran’s missile launch. SPDR S&P 500 ETF (NYSE:SPY) (ASX:SPY) , SPDR Dow Jones Industrial Average (NYSE:DIA) ETF (TSXV:DIA) , Invesco QQQ Trust QQQ and all-world ETF iShares MSCI ACWI ETF ACWI lost about 1.6%, 1.4%, 1.7% and 1.2%, respectively, in after-hour trading on Jan 7. Volatility ETN iPath Series B S&P 500 VIX Short-Term Futures ETN VXX gained about 9.9% in the extended hours.
In any case, the United States and Iran have been at loggerheads for about one and a half years now. The United States had placed a set of sanctions against Iran to put an embargo on Iran’s missile and nuclear programs, and curtail its influence on the Middle East (read: US Tightens Sanctions on Iran: Country ETFs to Gain/Suffer).
No wonder, investors sought safety and increasingly placed their bets on long/short ETFs to find a way around the volatility. Below we highlight a few of these (see all Long-Short ETFs here).
Global X S&P 500 Covered Call ETF HSPX
The CBOE S&P 500 2% OTM BuyWrite Index measures the total return of a portfolio consisting of equity securities of the companies included on the S&P 500 Index and call options systematically written on those securities through a buy-write or covered call strategy. The fund charges 65 bps in fees.
WisdomTree Dynamic Long/Short U.S. Equity Fund DYLS
The WisdomTree Dynamic Long/Short U.S. Equity Index includes long equity positions and short equity positions. It charges 48 bps in fees.
IQ Hedge Multi-Strategy Tracker ETF QAI
The underlying WisdomTree Dynamic Bearish U.S. Equity Index includes long equity positions The IQ Hedge Multi-Strategy Index seeks to replicate the risk-adjusted return characteristics of the collective hedge funds using various hedge fund investment styles, including long/short equity, global macro, market neutral, event-driven, fixed income arbitrage and emerging markets. It charges 80 bps in fees.
Hull Tactical US ETF HTUS
The Hull Tactical US ETF is an actively managed ETF which seeks to achieve long-term growth from investments in the U.S. equity and Treasury markets, independent of market direction. The fund charges 92 bps in fees.
IQ Hedge Long/Short Tracker ETF QLS
The underlying IQ Hedge Long/Short Index seeks to replicate the collective hedge funds pursuing a long/short strategy. The fund charges 67 bps in fees.
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SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports
IQ Hedge Multi-Strategy Tracker ETF (QAI): ETF Research Reports
iShares MSCI ACWI ETF (ACWI): ETF Research Reports
iPath Series B S&P 500 VIX Short-Term Futures ETN (VXX): ETF Research Reports
WisdomTree Dynamic Long/Short U.S. Equity Fund (DYLS): ETF Research Reports
Hull Tactical US ETF (HTUS): ETF Research Reports
Invesco QQQ (QQQ): ETF Research Reports
SPDR S&P 500 ETF (SPY): ETF Research Reports
IQ Hedge Long/Short Tracker ETF (QLS): ETF Research Reports
Global X S&P 500 Covered Call ETF (HSPX): ETF Research Reports
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Zacks Investment Research