ETFs To Prepare For The Looming Fiscal Cliff

September 05, 2012


Now that election season is here, investors may have forgotten about the series of spending cuts and tax hikes that could take place in January 2013. If a last-minute compromise doesn’t materialize between the election and the New Year, investors need to have a backup plan, according to an article published by ETF Trends.

Here are reasons investors should fear the possible “fiscal cliff,” according to ETF Trends:

  • It poses a potential threat to the economic recovery. While exact estimates differ, the economic impact is likely to be over $600 billion, or roughly 4 percent of GDP.
  • It would hit at a time when the economy is still in the midst of a fragile recovery, with U.S. gross domestic product growing by 1.7 percent.
  • It will hit the economy where it is most vulnerable: consumer spending. Should the fiscal cliff hit on schedule, it’s likely to lead to at least a modest economic contraction next year.


To mitigate the effects of the fiscal cliff, seek out exposure to large-cap equity funds with some low-volatility choices, such as the ones outlined below:

  • iShares MSCI All Country World Minimum Volatility Index Fund (NYSEArca: ACWV)
  • iShares S&P Global 100 Index Fund (NYSEArca: IOO)
  • iShares High Dividend Equity Fund (NYSEArca: HDV)
  • iShares Dow Jones International Select Dividend Index Fund (NYSEArca: IDV)


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