As the U.S. continues along the extended bull run, the markets are at greater risk of an uncertain turn upending investment portfolios. Consequently, more traders may look to inverse exchange traded funds to hedge the risks or even leveraged options to capitalize on short-term opportunities.
ETF Trends publisher Tom Lydon spoke with Sylvia Jablonski, managing director and head of capital markets and institutional strategy at Direxion Investments, at the Inside ETFs conference that ran Jan. 22-25, 2017 to talk about leveraged and inverse ETFs in a time of greater uncertainty.
“Since the election, we have a new president took office, and with a new president comes a a lot of uncertainty,” Jablonski said. “We’ve heard advisors talking a lot about two things: What are the opportunities and what are the risks.”
U.S. equities have popped since the presidential elections, but have recently meandered as traders grew more uncertain over President Donald Trump’s ability to execute campaign promises and the administration’s protectionist stance.
Looking at opportunities, Jablonski pointed to tax reform that could help companies more efficiently expand, along with deregulation cutting the red tape that has impeded many areas, like what Dodd-Frank has done to shackle the financials segment.
“On the 3x side, we have a lot of opportunities,” Jablonski said. “A 3x trader might be looking for something like leverage exposure S&P 500 or regional banks or financials.”