“During times of high potential returns and low potential risk, leverage can increase returns… Inverse ETFs can tactically reduce net equity exposure during market downtrends,” Tuttle said.
Sharon Snow, CEO of Metropolitan Capital Strategies, also points out that leveraged strategies can help investors generate that extra “umph” for their portfolios. For example, Metropolitan Capital Strategies has juice returns in healthcare last year through the Direxion Daily Healthcare Bull 3x Shares (NYSEArca: CURE). The firm expects telecoms and tech to outperform and is looking into Direxion Daily Technology Bull 3X Shares (NYSEArca: TECL) to gain exposure. When the Fed begins hiking rates, Snow expects to add on positions in TMV. [Triple-Leveraged Biotech ETFs Could be Coming Soon]
Moreover, David Dziekanski, portfolio manager for Toroso Investments, has found that allocating in a tactical portfolio for a more short- and mid-term time frame helps investors adapt to changing market conditions.
Financial advisors who are interested in learning more about alternative strategies for a shifting market can listen to the webcast here on demand.