Hi, I’m Gargi Chaudhuri, iShares Chief Investment and Portfolio Strategist for the Americas, and we recently hosted a webinar for retail investors about how to invest in volatile times.
Here are the key takeaways from the call, and next steps you might consider:
But first, a snapshot of what just happened...
The tariffs announced April 2 were much bigger than investors were expecting, prompting violent short-term price action amid uncertainty over where trade policy eventually lands.
In addition to the tariff uncertainty came lower expectations for economic growth.
Combine those and you have a recipe for market turmoil.
It’s too soon to predict how all this will play out. But the longer the uncertainty and volatility persist, the higher the odds the economy tips into recession.
So right now, we’re watching the three Rs:
Race to the ‘landing zone’ where will the overall effective tariff rate settle?
Reaction from countries: will there be retaliatory measures? How will additional negotiations progress?
Response from companies and central banks: how will companies manage higher tariffs? And what will the Fed do in the face of potentially slowing growth and rising inflation?
It’s possible that volatility and uncertainty around policy, growth and inflation continues for some time. Still, our key message is STAY INVESTED.
Over the past 20 years, an investor who stayed in the market would have made substantially more than one who missed just five top-performing days.1
That said, investors with a shorter time horizon or lower tolerance for risk may consider building in some defensiveness and focusing on diversification. Here are some options:
● The iShares Gold Trust (IAU) for convenient, cost-effective exposure to gold, historically a way for investors to diversify portfolios and hedge against geopolitical uncertainty.
● The iShares 0-3 Month Treasury Bond ETF (SGOV), which can be used to put cash to work and to seek stability in your portfolio.
● The iShares MSCI USA Min Vol Factor ETF (UMSV) for exposure to U.S. stocks with potentially lower risk than the broad market.
Long term investors who are more comfortable taking risk may consider options like:
● The iShares MSCI USA Quality Factor ETF (QUAL), which provides access to profitable U.S. companies that have low leverage and demonstrated consistent earnings over time.
● The iShares U.S. Equity Factor Rotation Active ETF (DYNF), an actively managed ETF that rotates to the investment styles – or factors -- that BlackRock believes will do best based on forward-looking insights.
● The iShares U.S. Thematic Rotation Active ETF (THRO), which seeks to dynamically rotate exposure to U.S. market themes ranging from long-term, structural forces to rapidly evolving trends.
You can research these and other ETFs at iShares.com, which can be a great resource for strategies to help you navigate market volatility.
Again, the key is to STAY INVESTED. That way you don’t risk missing out on a recovery that may be just around the corner.
Thank you for watching.
End of video disclosures:
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This information must be preceded or accompanied by a current prospectus. Investors should read and consider it carefully before investing.
Following an investment in shares of the Trust, several factors may have the effect of causing a decline in the prices of gold and a corresponding decline in the price of the shares. Among them: (i) Large sales by the official sector. A significant portion of the aggregate world gold holdings is owned by governments, central banks and related institutions. If one or more of these institutions decides to sell in amounts large enough to cause a decline in world gold prices, the price of the shares will be adversely affected. (ii) A significant increase in gold hedging activity by gold producers. Should there be an increase in the level of hedge activity of gold producing companies, it could cause a decline in world gold prices, adversely affecting the price of the shares. (iii) A significant change in the attitude of speculators and investors towards gold. Should the speculative community take a negative view towards gold, it could cause a decline in world gold prices, negatively impacting the price of the shares.
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Fixed income risks include interest-rate and credit risk. Typically, when interest rates rise, there is a corresponding decline in the value of debt securities. Credit risk refers to the possibility that the debt issuer will not be able to make principal and interest payments. An investment in the Fund is not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency and its return and yield will fluctuate with market conditions.
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1 Source: BlackRock, Bloomberg as of 12/31/2024. “Market” represented by the S&P 500 Index, an unmanaged index that is generally considered representative of the U.S. stock market. Past performance does not guarantee future results. It is not possible to invest directly in an index.
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