ETF Edge - Navigating the ripple effects of the U.S., China tariff pause 5/12/25

Episode Date: May 12, 2025

The 90-day tariff pause between the U.S. & China has thrown a wrench into two big ETF themes of this year: international investing and gold/bitcoin hedging. What should investors do now? We look at the near and long-term scenarios.    Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

The ETF Edge podcast is sponsored by InvescoQQQ. Let's rethink possibility. Investco Distributors, Inc. And welcome to ETF Edge. I'm Frank Collin. The U.S. and China, granted two temporary tariff cuts appears to be laying the groundwork for a more comprehensive trade deal. But there's still a ways to go before all the details get hammered out.

So how should ETF investors position now? Joining us now is David Shasler. Head of multi-assic Solutions at Vanek, along with Todd Rosenbluth, head of research of VETify. Gentlemen, thank you so much for joining us. Thank you. All right. Why don't we start with the big picture? David, great to have you here. We're going to start with the big picture. We're essentially in another 90-day pause. So what should an investor do, if anything, when it comes to domestic investing? Investors, first off, we're sitting 5% off off all-time highs in the SEP 500. If you didn't like the experience you had in April and you didn't like your drawdown experience, you got a gift from the market gods to diversify. We want to see people diversify. We want to see people diversify internationally. We want to see people diversify really into real assets as well, specifically gold. And if you're into it, I also want to see you diversifying into Bitcoin.

So the game plan right now run a diversified asset allocation, diversified internationally across asset segments across markets. That's our best thoughts on that. David, you got us drinking out of a fire hose. We're going to get to all those topics in just a minute. But I just want to focus just on the equity markets for a second. When you say diversify, do you mean like an S&P equal weight ETF or you're saying other sectors? You should move out of things like tech and financials that have really caught a bid so far this year. If your portfolio is predominantly invested in the United States, we want to see you diversify into international markets as well as emerging markets.

Right now, the markets are priced richly, meaning recessionary risks are high. We're not calling a recession, but we're saying recessionary risks are high. With PEs where they are in U.S. equities, there's a lot of value overseas. Secondarily, from a catalyst perspective, we're looking at a world that's more bifurcation. We're looking at a world that's going to be less reliant on U.S. dominance. In that type of setup, these countries are going to be forced to move forward, pushing their own growth. And when you have that backdrop, valuation support with a catalyst for growth, we think it's a good time to diversify some of your U.S. exposure internationally.

All right. Todd, really quick, want to get your thought on today's rally. We're seeing the markets boom on the idea of this temporary tariff reduction. Yeah, we've seen growth equities. rebound much more strongly. There's more technology-oriented, consumer discretionary-oriented sectors. So the S&P-500 growth strategy is outperforming the S&P-500 value. We think a good way to split the middle is to take a quality, but with a growth tilt.

So V-Flow from Victory shares is one of those ETFs we've been talking about at VETI. It's a value-oriented strategy, but has a growth filter to it because we might not see this rally continue on the growth side. So you want to make sure you're balanced within your portfolio. Yeah, sounds like you're talking about one of those factory ETFs. I've seen a lot of people pour into those this year looking for our performance. David, you were talking about it. But prior to today's news, there was a lot of buzz in the ETF world about international investing. Todd, I'm going to come back to you. Vetify just a few days ago, you're citing that one of the year's most popular equity funds

was the Vanguard Total International Stock ETF, the tickers VX, US, net gains of about $5.5.5 And however, that same article also pointed out that equated just under a tenth of the asset influx into Vanguard's S&P, ETF, the VOO. So is International now back on the sidelines in your opinion, Todd? We know what David thinks. He thinks you need to look for international for opportunities. But what about you, Todd? How are you seeing? Well, the flows have certainly been favoring U.S. equities.

Investors have been buying the dip. And today they're being rewarded. And you're right, VU, Vanguard 500 is approaching $60 billion in net inflows just this. year that could blow away the record that it set just a year beforehand. But we are seeing investors start to embrace international strategies. You mentioned VXUS being one of those more popular ones. There are the benefits of diversification. We haven't fully seen it, but I think this this trade deal or this pause could help to inspire people to diversify outside the United States. All right. So, David, while we're talking about diversifying away from the United States,

What about China specifically now? Obviously, the other side of these trade talks in Switzerland over the weekend and also the tariff rate for goods going into China also lowered. I think there's only one way to really perceive what happened, and that's as a positive. So another cloud removed, but the fact of the matter remains that there's a ton of uncertainty out there. So when you think about all the uncertainty out there and you start to think about markets like China, which is stimulating and they're stimulating aggressively, you start to think about

places like India, which is one of the best growth stories we think out there, maybe China 20 years ago, you start to look at some of these emerging markets, and there's a lot of things that look interesting there. So having exposure to China makes sense. Having exposure to India makes sense. We're also not anti-United States. We're just saying that if you're predominantly invested in United States, you probably want to diversify outside as well. Todd, your thoughts on China? Yeah, we've seen strong interest in China ETFs in the beginning of the year, that that faded. K-Web is the cranes. train shares China internet ETF.

It's still the largest of those China focused ETFs, the more growth-oriented companies. Those are less likely to be negatively impacted by whatever happens from tariffs because it's a China-only story as opposed to diversification and multinational the way that some of the other Chinese companies are. K-Web is one of those ETFs worth taking a closer look at

in this environment. All right, David, I want to come back over to you. You mentioned India just a short time ago. You've previously talked about India being one of the most compelling structural growth stories in the market. Also noting the recent India correction is a buying opportunity. One ETF that we track here at CNBC is the INDA. I'm looking at it pretty much flat year date, up about 1.5%, but really mostly moving sideways throughout the year. Is that the way you would play India right now?

Are there some other ETFs you would look at? Yeah, so we don't, first off, I guess big picture, just on the India's structural growth story. you've got huge population, tech savvy, well educated, and you've got a government supporting that. So we think all the, everything lines up there for the growth story, and you know, that correction is exactly a buying opportunity. So that's generally where we think about it

from a structural perspective. We offer a couple of different ETFs, DGIN is one of them. So I'll throw that one out to you. All right, so we're actually looking at some of them right now. The Indian ETFs for the ETFs that track Indian equities, definitely moving up, higher right now, looking at a number of them right now, the one you mentioned DGIN up over 5%. All right, David, I know you're excited. We're going to move on to gold now. You've been talking

about this a bit. One of the major hedges amid the recent uncertainty actually taking a leg lower today, gold down more than 3%. But again, Todd, how much of a hedge is appropriate right now? How do you view it? Yeah, we've seen advisors increasingly look to commodities like gold to be a diversifier within a broadly diversified portfolio, ETFs like GLDM give you pure exposure to gold, and then there's some gold mining ETFs. I'm sure David's going to talk about the Vannack ones in a moment. So I'll just highlight G-Bug, which is a Sprott ETF,

which is actively managed in the gold mining space that is relatively new entering into the market, but is a compelling one. But Vannack has some great gold mining ETF, as well. So David, even with the recent run before today's pullback, again, gold is safe haven. Investors kind of moving away from that safe safe haven into the equity market. You thought there was still a lot of room in time for investors to add gold. I want to ask you, how are you viewing gold right now? I'm looking at gold right now, trading about 3,200. Do you have a, what's your price target?

And do you think it's still a good place to put money in in this current environment? I couldn't imagine a better backdrop for gold. So you've got a situation where, where huge debt, huge spending, political chaos, all the stars are aligning for the macro thesis on gold. Here's the thing with gold. The gold market's a lot smaller than that of the equity market and a lot smaller than that a fixed income market. And you've got gold now significantly outperforming stocks over the one year, the two year,

the three year, the four year, and we think eventually the five year, that much outperformance makes it so that gold can't be ignored. And you've seen central bank buying for an extended period of time. Now you're seeing the return of the Western investment. to gold, and that's the gold flows that Tal was just referencing. That backdrop sets us up, we think, for like higher in gold, we've got the gold, the price target on gold at $5,000. We think it hits there probably somewhere in 2006, simply because you've got a stable asset base. You've got a stable supply. And then all these flows we think are going to translate to higher

gold prices. All right, David, then on the flip side, Vanek, one of the first movers into what a lot of people call digital cold. Of course, we're talking about Bitcoin. It was also lower today, but hasn't always been really trading right in line with gold. Your thoughts and allocations for investors right now. Bitcoin is the risky cousin of gold. We like it for all the same reasons. It's just a lot more volatile. So for us, it's not either or, it's both of them.

Thinking about solutions specifically, we've talked about gold before. O-U-N-Z is our gold bullion ETF. And we've got a diversify real asset solution, which has all real assets in it. That's R-A-A-A-X, that's the Vannick Real Asset Fund. But on the digital asset side, we have HODL. So lots of different ways to play it. But it's from our perspective, it's both, not either or. And we think both of them do great in the years to come.

So, Todd, you and I, we've actually talked quite a bit about Bitcoin. I-B-I-T, Bitcoin ETF saw some of the top inflows. We're also seeing a lot of ETF innovation around mixing Bitcoin with other strategies. And now we're seeing some progress around Ether. Where do you see this all headed next? Well, you're right. Ibit again was very popular. It's the largest of those Bitcoin-oriented ETFs. I want to piggyback on what David just said about the riskier cousin. And I'm impressed with what's going on in the options-based world tights to ETFs. So Calamos has continued to roll out a suite of options-based downside protection ETFs to give you exposure to cryptocurrency to Bitcoin, but limit that downside. Either 100% protected, 90% protected, 80% are protected.

Calamos has an interesting lineup for people who want to have some exposure to Bitcoin, but not necessarily that same level of volatility. All right, David and Todd, thank you so much for your time, your insight. What a great conversation. That's going to do it for this week's ETF Edge. Remember, you can catch this in all of our previous shows at www.cc.com slash ETF Edge. Thank you so much for watching. Have a great day.

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