Stock Market Warning Signs Flash as Investors Seek Safer ETF Havens
Warnings of a possible stock market downturn have surfaced as key financial measures flash red. Two widely watched indicators—the S&P 500 Shiller CAPE ratio and the Buffett indicator—now point to heightened risks in the stock market today. Yet for cautious investors, several exchange-traded funds (ETFs) are offering shelter from potential turbulence in the stock market.
The S&P 500 has enjoyed a strong run, posting double-digit annual gains for three years straight. In two of those years, returns even exceeded 23%. But after such a rally, concerns about overheating have grown in the stock market.
For those seeking stability, Vanguard's Short-Term Treasury ETF stands out. With an average bond duration of just 1.9 years and a minimal expense ratio of 0.03%, it provides a low-risk option. Another choice, the Vanguard Total Bond Market ETF, holds 11,444 bonds and currently yields nearly 4.2% over 30 days.
Stock investors looking to reduce risk can turn to the Vanguard U.S. Minimum Volatility ETF. Its portfolio, designed to track less volatile shares, carries a beta of 0.56—meaning it tends to move far less sharply than the broader stock market during sell-offs.
Meanwhile, global demand for U.S. government debt remains firm. China's holdings of U.S. Treasuries have steadily climbed since their 2008 low. At the same time, America's share of the worldwide government bond market has expanded, reinforcing its role as a safe-haven destination.
As market indicators raise alarms, investors have options to shield their portfolios. Treasury and bond ETFs offer steady returns with lower risk, while minimum-volatility stock funds aim to soften sharp declines. The shift toward these safer assets reflects growing caution after years of strong equity performance in the stock market today.
