An Active ETF to Help Manage Risks in Markets

The markets have enjoyed a long bull run that has pushed up valuations, which also leaves many open to greater risks. Consequently, fixed-income investors may turn to an actively managed exchange traded fund to better manage potential pitfalls.

ETF Trends publisher Tom Lydon spoke with Todd Jablonski, Chief Investment Officer at Principal Financial Group, at the Inside ETFs conference that ran Jan. 22-25, 2017 to talk about what financial advisors should be thinking about today.

“What we see is one high valuations on a lot of risk assets, particularly equities and high-yield debt, and in particular, what we fear is evaluations threatened in what we are describing as a rich environment for policy error,” Jablonski said.

For instance, we are hearing a lot about health care reform, tax cuts, fiscal stimulus and monetary policy changes, but the markets are not getting a lot of clarity on many of these economy changing events.

Jablonski warned that many of these upcoming changes are made based on human decision, which also leaves us open to human policy errors. Consequently, investors are exposed to a pullback on risk asset prices.