Many investors are wondering if ETFs will suffer badly based on the news that Greece is more than likely going to default. The best answer I can give is that ETFs will at least tumble some based on what happens in Greece, as will most everything else.
Single-country indexes on Monday in the region were suffering declines of 3%. Worries over Greece’s financial condition and the Eurozone debt crisis rippled through global markets. It seems the entire world is going to feel the burn if Greece defaults.
France’s CAC 40 declined 4.4% while Germany’s DAX fell 3.1%. ETFs tracking European stocks were falling to start the week after Friday’s rout. Why the major declines in these other countries? There is so much money tied up in Greece form other countries (including America) that if Greece defaults they are going to drag these other countries in a downward vortex with them. America has a ton of money tied up there, and many people will suffer hits on their retirement funds if Greece defaults.
The iShares Lehman 20+ Year Treasury Bond (NYSEArca: TLT – News) rose 0.7% as yields on the 10-year note traded under 1.9%. [Treasury ETFs Jump]
“The market is in extreme fear,” Charles Berry, a fixed- income trader at Landesbank Baden-Wuettemberg, told Bloomberg. “It’s the problem in the euro area that drove that sentiment.”
There are still some solid ETF investments, as real estate ETFs and Gold and Silver ETFs will more than likely remain strong and remain a good place to keep your money safe during these tough economic times.