With volatility kicking up recently, many investors have shied away from stocks, fleeing to safe-havens, even as the market has continues to stagnate roughly 3-5% off its all-time highs. But for those investors looking for an ETF that allows them to stay invested, the Invesco Defensive Equity ETF (DEF) could be a suitable choice.
According to Invesco, “the Invesco Defensive Equity ETF (Fund) is based on the Invesco Defensive Equity Index (Index). The Fund will invest at least 80% of its total assets in securities that comprise the Index. The Index is designed to provide exposure to securities of large-cap US issuers. The Index uses a rules-based approach to select companies that potentially have superior risk-return profiles during periods of stock market weakness while still offering the potential for gains during periods of market strength. The Index is computed using the gross total return, which reflects dividends paid. The Fund and the Index are rebalanced quarterly.”
“I put this name up earlier— this is the Invesco Defensive Equity ETF (DEF). It looks for safety place, but I think with a more modern approach. So it looks for Starset a really high betas. It kicks those out of the S&P 500 it looks for star stead of a stork Lee done poorly in downturns. It kicks those out of the S&P 500 then it looks it was left and only picks those would really long-term sustainable revenue models. You end up with 100 Equal way to stocks, with pretty broad sector exposure. I think it’s a great play for lot investors to want to stay invested in the equity market,” said Dave Nadig, managing director of ETF.com on CNBC.
What Are The Risk Parameters
Steve Grasso, managing director of institutional trading at Stuart Frankel agrees, exhorting the DEF’s risk parameters.
“So it depends on how you wanted to find safety. But I think for all apparent purposes this is an excellent way to do so. Because you have things that are clearly defined a safety, clearly defined as risk, and so I think you sort of get a hybrid model here where you only go with things that have performed,” said Grasso.
One issue investors face is whether to avoid a sector entirely if it is under-performing. Nadig feels DEF helps in this regard.
“I think it avoids the trap of saying I’m not gonna own any technology because that’s growth, and we’re not gonna be in a growth market. Or I’m gonna avoid all healthcare stocks because that’s a political football. I think it lets you stay invested. And I think that’s the most important thing as we head into what’s going to be a crazy 18 months,” added Nadig.
Grasso sees DEF as a possible harbinger of what is to come in the ETF space.
“And think about every other ETF. It’s just specific to one sector and one space. See you going to start seeing a lot more of these hybrid models coming along and they’re great choice for people preparing for their own retirement or their children’s investment,” added Grasso.
For more market trends, visit ETF Trends.