Displaying items by tag: hedging
A successful 8-month streak has put the market well above expectations, and there are reasons to still be optimistic, but the number of protection plays is growing on Walls Street. Whether it is a slowing economy, rising inflation, spreading delta variant, or tapering tantrum there are lots of reasons to stay protected which is why over $5 billion in inflows are headed to volatility-based protections. Funds like the Simplify Interest Rate Hedge ETF (PFIX) offer a direct hedge against a future of the interest rate market by placing a call on Treasury derivatives. A wider hedge against the ETF like the Simplify Volatility Premierm ETF (SVOL) which can generate a yield from swings in the Cboe Volatility Index. This hedge is less specific than the PFIX but it gives investors a bigger safety net in any of the scenarios above or unforeseen risks in the economy.
FINSUM: Honestly leave the bond hedges to the past as there is no return. Instead, SVOL and PFIX are hedges that will likely clip the Treasury return anyway and provide more relief in case equities go upside down.
Market volatility has been rising substantially and advisors may be interested in looking for holistic ways to diversify risk. Take a look at WisdomTree’s lineup of models, which are quite comprehensive. Using a factor-based approach, WisdomTree has a number of models to help investors hedge risk. This kind of approach can be quite useful right now as the market has been so unpredictable. According to the CIO of WisdomTree “We see an almost total factor performance reversal. In Q1 (when interest rates were rising), the market was led by value, dividends, and quality, with growth and momentum trailing far behind … But since then (as interest rates have fallen), it has been exactly the opposite—growth, momentum, and quality have led the way, while value and dividends dramatically underperformed”.
FINSUM: Models are an increasingly popular way for advisors to achieve a lot of investing goals, and they may be most useful because they can help save time by giving a single point-of-access to a comprehensive strategy.
Two of the biggest problems facing many investors are how to handle potential inflation and taxes but…see the full story on Magnifi’s site
Volatility hasn’t been on almost anyone's minds for most of 2021, but…see the full story on our partner Magnifi’s site.