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iShares Core High Dividend ETF: Downside Protection Amid Tariff Dispute

Published Mon, 01 Oct 2018 10:00:47 -0400 on Seeking Alpha

Investor Takeaway iShares U.S. Technology ETF (IYW) has greatly benefited investors in the long-term past, exemplified by the 5-year price change for the ETF being 144.6%. Albeit, the bilateral trade dispute among the United States and China could affect equities that are in the composition of IYW. Apple Inc. (AAPL) could receive the most direct influence from the escalation of the tariff clash. AAPL makes up 16.59% of the total composition of IYW. The supply chain for AAPL is deeply rooted in East Asia, and the U.S. technology sector relies on a supply chain that is heavily influenced by China and other regional players. Initially, Trump had excluded mobile phones from the first set of tariffs directed towards China. However, it does not seem that this will stay the case.
Recently, Goldman Sachs stated that the likelihood of tariffs on all of imports from China has risen to 60%, according to an article reported by CNBC.

IYW data by YCharts
Investors seeking to preserve capital in a possible downside case for IYW could allocate towards the iShares Core High Dividend ETF (HDV).
This bilateral dispute is not showing relatively efficient signs of decelerating. Investors need to allocate capital to shield their holdings to receive the least amount of influence from the current interconnected nature of global economics. U.S. equity segment investors in particular need to shield their portfolios against the implications of a full-on trade war.
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