Displaying items by tag: volatility

As market volatility rattles investors, many are turning to “buffer” ETFs—funds that trade off some upside potential in exchange for protection against downside risk. These ETFs, which use options strategies to cap losses while limiting gains, have drawn $4.7 billion in inflows so far this year, with a notable $140 million coming in on the S&P 500’s worst day of 2024. 

 

Financial advisors are increasingly adopting them to reassure clients and keep them invested during turbulent times, especially as traditional stock valuations remain high. The appeal lies in downside protection, though investors must accept lower upside caps and higher fees—some charging more than ten times what plain index ETFs do. 

 

Assets in buffer ETFs surged to $64 billion by February, up from $38 billion at the end of 2023, as their defensive qualities grow more attractive in an uncertain economic and political climate. 


Finsum: Some advisors warn against overcommitting, reminding investors to balance protection with realistic expectations about long-term growth and costs.

Published in Wealth Management

Hedge funds saw mixed results in February as market volatility surged amid trade tariff uncertainties. Fixed-income strategies performed well, benefiting from falling interest rates, while macro and equity hedge funds struggled due to sharp declines in technology stocks. 

 

The HFRI Fund Weighted Composite Index fell 0.47%, with relative value arbitrage and event-driven strategies posting gains that were outweighed by broader declines. Cryptocurrency funds took a significant hit, with the HFR Cryptocurrency Index dropping 16.8% as volatility spiked. 

 

Meanwhile, event-driven funds gained modestly, and fixed-income strategies extended their winning streak, marking another month of positive returns. 


Finsum: As hedge funds navigate volatile conditions, their ability to adapt remains key to delivering returns in uncertain markets.

 

Published in Alternatives
Monday, 04 November 2024 02:50

Think Alternative with Political Uncertainty

With the U.S. presidential election approaching, markets are anticipating potential volatility, and investors are weighing where to allocate their money. While some hedge funds are positioning for “Trump trades,” U.S. Global Investors instead sees growing opportunities in alternative assets like gold and Bitcoin. 

 

Paul Tudor Jones shares this perspective, highlighting these assets as hedges against rising U.S. debt and inflation concerns. The national debt has reached unsustainable levels, doubling its GDP ratio over 25 years, and the federal deficit continues to climb. 

 

As inflation impacts traditional assets, commodities like gold, silver, and Bitcoin have become more attractive as they tend to perform well in inflationary environments. 


Finsum: Despite election-related uncertainties, holding alternative assets may help investors maintain portfolio stability in the long run.

Published in Alternatives
Thursday, 05 September 2024 03:40

Three Low-Cost Low-Volatility ETFs For Fall Turbulence

In recent months, the stock market has been extremely volatile, prompting increased interest in low-volatility low-cost ETFs. While the market has seen gains this year due to a growing appetite for riskier investments, uncertainties like the Federal Reserve's future actions, geopolitical tensions, and the upcoming U.S. presidential election still loom large. 

 

Low-volatility ETFs offer investors a way to participate in the market with potentially less risk, although they are not immune to sharp downturns. These funds may underperform compared to more dynamic portfolios, especially during market surges. However, they can be attractive for those prioritizing capital preservation over high returns.

 

 Examples of popular low-volatility ETFs include the Invesco S&P 500 Low Volatility ETF, which focuses on the least volatile stocks in the S&P 500, and the iShares MSCI EAFE Min Vol Factor ETF, which targets lower-risk companies in developed markets outside the U.S.


Finsum: Be mindful of what thematic ETFs you want to integrate into your portfolios, because there will be a chance to capitalize in the coming months. 

Published in Bonds: Total Market

The T. Rowe Price International Equity ETF (TOUS) is an active ETF that has gained attention for its diversification benefits, especially after a recent market sell-off. With a competitive 50 basis point fee, TOUS focuses on high-quality international firms with strong business models and good valuations. 



TOUS has an active strategy built around macro factors through an international lens that uniquely positions it for the type of interest rate volatility the US is experiencing. 



The fund’s active management allows for flexibility in selecting companies, particularly in non-U.S. markets, which could be advantageous during volatile periods. TOUS has returned 9.8% over the past year, making it an appealing option for diversification away from U.S. mega-caps.


Finsum: We’ve been banging the drum on the need to diversify into active funds during this volatility and this recent flash was an example why. 

 

Published in Bonds: Total Market
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