The stock market has been under pressure with sky-rocketing inflation, aggressive rate hikes, geopolitical issues, and consecutive periods of negative GDP. On the other hand, the labor market remains resilient. Analysts are divided on the risk of a recession, with some stating it as inevitable while others don’t see anything that resembles a recession.

“We live in a period of multiple shocks – from Covid 19 over energy prices to political deglobalization – which make predictions extremely difficult,” said Alexander Nutzenadel, professor of social and economic history at the Humboldt University of Berlin.

Amid such uncertainties, we think investors should consider buying JPMorgan Ultra-Short Income ETF (JPST), iShares Floating Rate Bond ETF (FLOT), and Fidelity MSCI Utilities Index ETF (FUTY) to protect their portfolios.

JPMorgan Ultra-Short Income ETF (JPST)

JPST, an actively managed ultra-short-term fund, invests in fixed-rate, variable-rate, and floating-rate debt and is suitable for investors looking for a relatively safe way to get a little more yield than from brokerage sweep accounts, money market funds, or long-term treasuries.

With $21.70 billion in assets under management (AUM), JPST’s top holdings include U.S. Dollar with a 39% weighting in the fund; followed by Fixed Income (unclassified) at 1.9%; and Nordea Bank AB (New York) FRN at 0.85%. It currently has 535 holdings in total.

Over the past year, the ETF’s fund flows have come in at $3.83 billion. In addition, its 0.18% expense ratio compares favorably to the 0.64% category average.

JPST’s annual dividend of $0.48 yields 0.95% on prevailing prices. It paid its last monthly dividend of $0.08 on September 7, 2022. Its dividend payouts have increased at a 28.1% CAGR over the past five years.

The ETF has gained marginally over the past month to close the last trading session at $50.17.

JPST’s strong fundamentals are reflected in its POWR Ratings. It has an overall A rating, which translates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

It has an A grade for Trade, Buy & Hold, and Peer. JPST is ranked #1 of 32 ETFs in the Ultra-Short Term Bonds group. The group is rated A. Click here to see more of JPST’s POWR Ratings.

iShares Floating Rate Bond ETF (FLOT)

FLOT provides exposure to floating rate debt, which may be appealing to investors looking to reduce interest rate risk. This ETF invests in debt with coupon payments calculated in reference to a benchmark rate, such as LIBOR.  It will generally offer less return potential than other ETFs in the corporate bonds ETFdb category that invests in fixed-rate debt.

BlackRock Cash Funds Treasury SL Agency Shares have a 2.7% weighting in the fund as its top holding, followed by Goldman Sachs Group, Inc. at 1%, and Morgan Stanley FRN at 0.96%. FLOT has $9.34 billion in assets under management. The fund has witnessed a net inflow of $421.11 million over the past six months. It has an expense ratio of 0.15%, lower than the category average of 0.20%.

It pays $0.41 in dividends annually, which yields 0.82%. It paid its last monthly dividend of $0.11 on September 8, 2022. The ETF has gained 0.5% over the past month to close the last trading session at $50.40.

It is no surprise that FLOT has an overall A rating, which translates to Strong Buy in our POWR Ratings system.

It also has an A grade for Trade and Buy & Hold and a B for Peer. It is currently ranked #4 in the Ultra-Short Term Bonds group. To see more of FLOT’s POWR Ratings, click here.

Fidelity MSCI Utilities Index ETF (FUTY)

FUTY tracks an index of U.S. utility stocks, a sector known for relatively low volatility and relatively high distribution yields. This ETF can be useful for establishing exposure to a low-risk segment that can enhance current returns. FUTY owns more than 60 companies, including small caps, and is most appealing to portfolio managers implementing a sector rotation strategy. 

FUTY has $2.31 billion in assets under management and a 0.08% expense ratio. Its net flows came in at $895.16 million over the past six months and $254.23 million over the past three months. Its top holdings include NextEra Inc. (NEE) with a 14.3% weighting; Southern Company (SO) at 6.8%; and Duke Energy Corporation (DUK) with 6.8%. It currently has 68 holdings in total.

FUTY’s annual dividend of $1.21 yields 2.44% on prevailing prices. It paid its last quarterly dividend of $0.28 on June 23, 2022. Its dividend payouts have increased at a 2.8% CAGR over the past three years and 2.4% CAGR over the past five years.

FUTY closed the last trading session at $49.83. It gained 11.7% over the past nine months.

FUTY’s POWR Ratings reflect this promising outlook. The ETF has an overall rating of A, which equates to Strong Buy in our proprietary rating system.

FUTY has an A grade for Trade and Buy & Hold. FUTY is ranked #3 of 13 stocks in the A-rated Utility ETFs group. To see more of FUTY’s component grades, click here.

JPST shares were unchanged in after-hours trading Monday. Year-to-date, JPST has gained 0.05%, versus a -12.83% rise in the benchmark S&P 500 index during the same period.

Komal's passion for the stock market and financial analysis led her to pursue investment research as a career. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.

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