Displaying items by tag: volatility

Derivative income ETFs, built around covered call strategies, have surged in popularity as investors seek higher yields. These funds generate income by selling call options on stocks or indexes, with the trade-off being limited upside potential during strong market rallies. 

Yields can vary widely depending on how aggressively options are written, with higher payouts often signaling greater risk. The largest products in this space track benchmarks like the S&P 500 and Nasdaq, though smaller providers have introduced sector and single-stock versions. 

While income potential is attractive, investors should weigh opportunity cost, since these strategies often trail the broader market over time. 

Finsum: With interest rates likely to fall, option premiums, and thus fund income, may decline, but yields remain compelling compared to traditional dividend ETFs.

A new Goldman Sachs Asset Management survey shows insurers are increasingly focused on annuities as a retirement income solution amid ongoing market volatility. Sixty-four percent of respondents rank annuities among their top three priorities, with many already offering or considering in-plan annuity options. 

Integration into managed accounts and target-date funds is rising, and automatic plan defaults are viewed as key to driving adoption during retirement decumulation. Registered index-linked and guaranteed variable annuities are gaining popularity, and insurers are diversifying underlying indices, with rising interest in AI strategies and international markets. 

AI is also being widely adopted, with 90% of insurers seeing it as vital for improving investor understanding, education, and operational efficiency. 

Finsum: Registered investment advisers have become the leading growth channel for annuity distribution, surpassing independent firms.

Private equity firms began the year with strong momentum and over $1.6 trillion in dry powder, eager to deploy capital amid improving deal activity. However, rising trade tensions and macroeconomic uncertainty are making investors more cautious, with many GPs expecting tariffs to slow deployment over the coming months. 

Despite this, Q1 saw a surge in deals—volume rose over 45% and value more than doubled year-over-year—driven by large transactions like Sycamore Partners’ take-private of Walgreens. Market volatility has paradoxically raised firms’ risk appetite, with nearly three-quarters indicating they’re more willing to act on mispriced opportunities across sectors such as defense, middle-market manufacturing, and distressed assets. 

Amid these trends, firms such as CNL Strategic Capital are shifting focus to value creation within their portfolio of companies seeking long-term growth

Finsum: Private Markets are a great way to sidestep current volatility

In a market rattled by volatility in both stocks and bonds, dividend ETFs are drawing attention as a middle ground between growth and income strategies. While passive giants like Vanguard’s VIG and Schwab’s SCHD dominate with low fees and broad exposure, a growing number of active ETFs—like T. Rowe Price’s TDVG—are betting they can outperform by handpicking high-quality dividend payers. 

TDVG blends income with potential capital appreciation and holds familiar names like Apple and Microsoft, offering tech exposure without overconcentration. Active managers argue their flexibility allows them to adapt to changing market conditions in ways passive index funds cannot, especially when navigating risks like dividend cuts or sector shifts. 

Although passive dividend ETFs still attract more investor flows due to cost advantages, actively managed funds are slowly gaining traction, particularly among investors seeking income stability amid rising macroeconomic uncertainty. 

Finsum: For those dependent on income—like retirees—dividend strategies remain appealing, but experts caution that yield alone shouldn’t drive decisions.

In early 2025, target date fund (TDF) investors experienced a setback as U.S. stock markets declined sharply, with a 12% year-to-date loss driven by tariffs and fears of a market correction. For years, diversification beyond U.S. equities hurt performance, but that trend reversed as global factors began to weigh on domestic markets. 

The SMART TDF Index, which models ideal TDF allocations with better risk management, has outperformed the industry standard, revealing that most TDFs are overexposed to risky U.S. assets. April’s turbulence, sparked by the April 2 “Liberation Day” tariffs and further losses in the S&P 500, has intensified concerns about sequence-of-return risk, especially for those nearing retirement. 

Despite historical lessons and available low-risk alternatives like the SMART Index and TSP, most TDFs remain unprepared for prolonged downturns. 

Finsum: With fear dominating investor sentiment, now may be the time to rethink how TDFs protect retirement savers.