While the markets attention has been focused on equities with U.S. stocks pushing toward new heights and an aging three-decade long bull run in bonds, investors should consider alternative assets to better diversify and limit downside risk.
“With markets near all-time highs, it is difficult to apply modern portfolio theory and be truly diversified,” Wieder said. “Investors should instead implement multi-directional strategies that are needed in the current market environment to be truly diversified.”
For example, as part of a diversified portfolio that employs some form of risk management, investors may consider precious metals ETFs that offer low correlation to equities and fixed-income assets. These precious metals exposure would zig while stocks and bonds zag.
Investors can gain exposure to precious metals through a number of physically backed ETF options, including ETFS Physical Swiss Gold Shares (NYSEArca: SGOL), ETFS Physical Silver Shares (NYSEArca: SIVR), ETFS Physical Platinum Shares (NYSEArca: PPLT) and ETFS Physical Palladium Shares (NYSEArca: PALL). ETF investors can also use the ETFS Physical Precious Metals Basket Shares (NYSEArca: GLTR) as a catch-all of all four precious metals.
Financial advisors who are interested in learning more about hedging strategies for potential volatility ahead can register for the Thursday, January 12 webcast here.