Which ETFs Have Outperformed Through the Sell-Off

The S&P 500 index has plunged about 12% since Feb. 19 through Friday’s close largely in response to the spreading coronavirus, pulling down many equity-linked exchange traded funds (ETFs) along with it. But a notable number of ETFs have bucked the trend and are outperforming, including those tied to bonds, gold, utilities, and, surprisingly, China, where the virus first broke out.

Several examples are detailed below.

For example, from Feb. 19 through March 6, the iShares 20+ Year Treasury Bond ETF (TLT) and the iShares 7-10 Year Treasury Bond ETF (IEF) were up by 14.6% and 6.1%, respectively. Both fixed-income ETFs continued to post gains on Monday morning, even as the S&P 500 continued to slide. On March 3, the Federal Reserve cut interest rates partly in response to the financial impact of the coronavirus.

In addition to U.S. Treasury securities, gold is another safe haven asset that tends to outperform during times of crisis and heightened investor worry. For example, the SPDR Gold Trust (GLD) gained 3.8% from Feb. 19 through March 6.

Given that China is at the center of the coronavirus crisis, and showing the most severe negative economic impacts to date, it is highly counter-intuitive that some China-focused ETFs might outperform. Nevertheless, the Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) was up by 2.1% from Feb. 19 through March 6. There are several possible reasons for this unexpected result. Many experts say the epidemic may be peaking in China, which means that country may be the first to recover economically, especially since the Chinese government is intervening heavily to bolster its financial markets.

While still down during the recent market correction, defensive stocks generally have fallen by less than the market as a whole. Among the sectors that have held up better than the overall S&P 500 are consumer staples, utilities, and real estate, with the latter two also helped by the Fed’s recent rate cut. During the Feb. 19 to March 6 period, for example, the Consumer Staples Select Sector SPDR Fund (XLP) was down by 4.6%, the Utilities Select Sector SPDR Fund (XLU) dropped by 4.4%, and the Real Estate Select Sector SPDR Fund (XLRE) retreated by 6.7%.