The global stock markets are seeing choppy trading thanks to the
tension between Ukraine and Russia. All eyes are currently on
Europe and the whole world is watching the impact of any
development in the worst East-West standoff since the Cold War.
Ukraine Crisis in Focus
The tensions in Ukraine have flared up ahead of the referendum to
be held on March 16 that will decide the fate of Ukraine's Crimean
peninsula region. The referendum will tell whether the debated
peninsula will move to Russia or will stay with Ukraine. The
lawmakers may vote for independence and might agree to its becoming
a Russia state (read:
How Russia ETFs Have Performed in the Ukraine
The G7 group of nations - the U.K., Canada, France, Germany, Italy,
Japan and the U.S. - along with EU leaders warned Russia over
Crimea annexation and asked Russia to stop the referendum from
taking place. The G7 views the referendum as illegal and a clear
violation of international law.
Further, if Russia does not cease its effort to annex Crimea or
pull Russian troops out of the region then Moscow will be penalized
and hit by tough sanctions such as asset freezes and travel bans.
However, Russia has not yet abandoned its ambitions in Crimea and
has tightened its control on the peninsula.
The Ukraine-Russia dispute aggravated when the Ukrainian president
Viktor Yanukovych was ousted in late February and Russian President
Vladimir Putin started doubting that the new Ukrainian government
might cancel the Russian Navy's lease. As a result, Putin wants
Crimea to be under Russian roof. This is especially true as the
region is home to Russia's Black Sea fleet and its main port is on
lease to Russia.
The geopolitical tension might heighten further in the near term if
Russia does not back out or if the referendum is presented this
weekend. Given this turbulence, investors are dumping riskier
securities and are turning to any safe haven play (read:
3 Energy ETFs to Buy on the Ukraine Crisis
ETFs to Consider
For those investors, we have highlighted three ETFs that will
likely benefit from the crisis and would be in focus in the weeks
SPDR Gold Trust ETF (
This is the ultra-popular gold ETF with AUM of over $35.1 billion
and heavy volume of more than 8.2 million shares a day. It charges
40 bps in fees per year from investors (read:
Palladium ETF Surging on Tensions in Ukraine
The fund tracks the price of gold bullion measured in U.S. dollars,
and kept in London under the custody of HSBC Bank USA. Each share
represents about 1/10th of an ounce of gold at current prices. The
ETF added about 6% over the past one month and has a Zacks ETF Rank
of 3 or 'Hold' rating.
iShares 20+ Year Treasury Bond ETF (
This fund provides exposure to the long-term Treasury bonds by
tracking the Barclays Capital U.S. 20+ Year Treasury Bond Index. It
is one of the most popular and liquid ETFs in the bond space having
amassed over $2.8 billion in its asset base and more than 7.7
million shares in average daily volume. Expense ratio came in at
Holdings 23 securities in its basket, the fund focuses on the top
credit rating bonds (AA+ and higher). The average maturity comes in
27.28 years and the effective duration is 16.46 years. The product
gained just 1.32% in the past one month and has a Zacks ETF Rank of
3 or 'Hold' rating (read:
3 Bond ETFs Surging as Interest Rates Tumble
CurrencyShares Japanese Yen Trust (
This product appears a great way to play a future rise in the yen
relative to the U.S. dollar. It tracks the movement of the yen
relative to the U.S. dollar, net of the Trust expenses, which are
expected to be paid from the interest earned on the deposited
Japanese yen (see:
more Currency ETFs here
The fund charges 40 bps a year in fees. Additionally, the ETF sees
a good volume of roughly 257,000 shares per day and has accumulated
$189.1 million in its asset base. The ETF lost 0.24% in the
trailing one-month period and has a Zacks ETF Rank of 4 or 'Sell'
rating. While long-term trend is negative due to Abenomics, the
short term looks promising as investors are currently riding high
on Japanese yen due to uncertainty in Ukraine.
It seems that the political unrest in Ukraine might turn into a
cold war if Russia does not stay away from military escalation.
This would continue to roil global markets, making the
above-mentioned ETFs solid ways to play the trend.
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CRYSHS-JAP YEN (FXY): ETF Research Reports
SPDR-GOLD TRUST (GLD): ETF Research Reports
ISHARS-20+YTB (TLT): ETF Research Reports
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