The global economy is going through a rough phase right now. Many of the major stock markets are down, and businesses across the globe are struggling. However, the current financial headwinds are not the same as they were during the pandemic. Different factors are in play right now, and the recovery might also be different and more reasonably paced than it was right after the pandemic.
If you want to take advantage of the current slump and future recovery potential but are unsure about finding the right stocks for this, you can invest in the markets directly. There are plenty of ETFs that offer you exposure to the entirety, bulk, or segments of almost all major markets around the globe.
A European market ETF
If you are interested in the European markets, FTSE Developed Europe All Cap Index ETF (TSX:VE) might be worth considering. After a powerful post-pandemic recovery, the ETF started losing its value in Aug. 2021 and has fallen about 23.7% by now.
The ETF aims to track a broad spectrum, European-focused index. It’s an impressive basket of assets, made up of about 1,343 stocks. U.K. businesses make up the largest slice of the pie (about 26%), followed by France and Switzerland.
Even when the economy and the markets were healthy, the ETF didn’t experience aggressive appreciation. It might be a better pick for capital preservation and staying just ahead of inflation rather than growing your capital. It makes quarterly distributions, and the last 12-month yield is 2.95%.
A Canadian market ETF
For investors that wish to invest close to home and in the domestic stock market, BMO S&P/TSX Capped Composite Index ETF (TSX:ZCN) is definitely worth considering. It comes with an MER of about 0.06%, making it quite low cost.
And it offers you exposure to the bulk of the TSX (239 heavyweights). Since the ETFs holdings are a relatively accurate representation of the Canadian market, financial and energy businesses are overrepresented.
The ETF tracks the performance of the underlying market quite faithfully. But we also have to take the generous dividend stocks in the TSX and the ETF’s distributions into account when calculating the return potential, which enhances the total-return potential. Your $10,000 in the ETF at its inception would have grown to about $21,700 by now, which is decent enough for a slow and reliable ETF.
A U.S. markets ETF
The U.S. stock markets tend to offer more aggressive growth compared to many other markets, including Canadian. And if this is something you are interested in, iShares Core S&P US Total Market Index ETF (TSX:XUH) would be a good choice. Its average annual growth in the last five years has been quite modest (8.8%), but that’s due to two different slumps the ETF has experienced in this relatively short period.
The ETF offers you exposure to about 3,650 holdings, almost the entirety of the U.S. market. It also offers quarterly dividends, but the 12-month trailing yield is quite low compared to the Canadian one (1.28%). And even though the ETF has slumped about 14% so far, the current distribution yield is merely 1%. So, it’s mostly growth that you are getting with this ETF.
Foolish takeaway
No matter which side of the ETF vs. index fund debate you lean towards, the three ETFs could be a good fit for you since all three follow an underlying index. They also offer you adequate exposure to multiple regional markets of three mature economies.
