The American stock market has been in a downward spiral this year and continues to trail behind its global counterparts, such as those from Germany, France and China. Next week, when Trump imposes Liberation Day Tariffs and triggers a trade conflict, this performance could continue.
To prepare yourself for the tariffs, you can invest in blue-chip quality ETFs. The article discusses the top ETFs that you should buy, hold and invest in ahead of tariffs.
Buy blue-chip ETFs before tariffs
When Trump implements tariffs, some defensive ETFs are likely to do well. Some of the most prominent names include Vanguard Utilities ETF, Vanguard Health Care ETF, and Vanguard Consumer Staples ETF.
SPDR Gold Shares (GLD),
GLD ETF has been rated as one of the top blue-chip ETFs to purchase, especially with the intensifying trade war. The GLD ETF has already increased by more than 17% in this year, and 38% over the past 12 months. It is currently hovering at its highest level.
A rising risk environment will encourage more investors to move into gold. The ongoing tensions among the US and its allies and enemies will also see many companies move away from the dollar.
The GLD ETF could also do well if the Federal Reserve begins to lower interest rates in the second half of this year, to combat a possible recession.
Vanguard Utilities ETF
Utilities, which are always in demand by customers, make for excellent investments during economic downturns. Water and electricity will be paid by homeowners, so many utilities will continue to do well.
VPU ETF ranks as one of the most reliable funds during recessions. The expense ratio is only 0.09% making this ETF very affordable. The ETF tracks 69 stocks and its average P/E is 20.2x.
The majority of the companies that make up the VPU ETF belong to the electric utility sector, with gas utilities and independent power producers following. The fund is dominated by NextEra and Southern. Duke Energy, Constellation Energy and American Electric Power are also popular names. VPU ETF is a fund with a yield of 3% and it has increased by 3.5% in the past year.
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Vanguard Health Care ETF
A rising drug demand will make the healthcare industry a safe place to invest your money. In the US, many people don’t buy medicine themselves. They rely instead on government and private insurance.
VHT ETF offers a low-cost fund due to its focus on the healthcare industry. The fund holds 413 different companies in areas such as biotechnology, pharmaceuticals and managed healthcare.
VHT ETF is dominated by Eli Lilly and UnitedHealth Group. Other major companies include AbbVie Johnson & Johnson Merck Intuitive Surgical Merck Johnson & Johnson Merck Johnson & Johnson Merck Intuitive Surgical Merck Merck Merck Merck Merck Merck Merck Merck Merck Merck Merck Merck Merck Merck Merck Merk This fund is expected to continue its good performance this year. It is a risky fund because it’s exposed to volatile biotech firms. The fund is expensive with a P/E ratio of 30.
Vanguard Consumer Staples ETF (VDC)
Vanguard Consumer Staples ETF VDC is another fund that you can invest in when Trump’s Trade War starts. Consumer staples companies often perform well regardless of market conditions, since their customers purchase their products.
The VDC ETF is a fund that tracks some of the largest companies within the sector. Funds are dominated by merchandise retail, home products, and soft drinks & non-alcohol beverages. Costco, Walmart and P&G are among the largest companies in the fund.
Buy other ETFs
When the trade war begins, you can also buy other blue-chip ETFs. There are three notable ETFs: VanEck Morningstar Broad Moat ETF MOAT, Pacer US Cash Cows ETF COWZ and Schwab US Dividend ETF SCHD.
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The post Blue-chip ETFs: Best to Buy as Donald Trump’s Trade War Escalates may change as new developments unfold
