Investors are still looking for ways to diversify and hedge against market volatility in a prolonged bull run, but traditional diversifiers like fixed-income assets are more at risk in the late business cycle.
On the upcoming webcast, Hedge or Seek Yield: What Advisors Need to Know, Kevin McCreadie, Chief Executive Officer & Chief Investment Officer at AGF Management Limited, and Bill DeRoche, Chief Investment Officer & Portfolio Manager at AGF Investments LLC, will look to a strategic hedge to the equities market along with a source of yield and returns to help financial advisors better manage future downside risks and still participate in any further upside potential.
For example, ETF investors can look to the recently launched AGFiQ Dynamic Hedged U.S. Equity ETF (USHG) to diversify a traditional portfolio with alternative market exposures. The AGFiQ Dynamic Hedged U.S. Equity ETF provides exposure to a diversified portfolio of U.S. equities, while seeking to provide long-term capital appreciation with lower volatility using embedded downside risk management which seeks to protect capital. The ETF offers exposure to the long-term growth potential of U.S. equities using a multi-factor approach designed in an effort to have lower volatility and better risk-adjusted returns relative to the market through its use of a dynamic hedging model.
ETF investors can also look to an ETF strategy that incorporates an “Anti-Beta” style to provide uncorrelated returns to stocks. The AGFiQ U.S. Market Neutral Anti Beta ETF (BTAL) acts as a more traditional long/short strategy that goes long low beta stocks and short high beta stocks. Consequently, the ETF strategy can produce positive returns any time low beta outperforms high beta.
BTAL provides investors with the means to capitalize on the spread return between low- and high-beta stocks within the S&P Dow Jones U.S. Index. When the market sells off and volatility rises, high-beta stocks tend to sell off more than low-beta stocks. On the other hand, during market recoveries, volatility diminishes and high-beta names outperform low-beta stocks.
Additionally, investors may consider the AGFiQ Hedged Dividend Income ETF (NYSEArca: DIVA), which tracks the INDXX Hedged Dividend Income Index, to capture strong current yield capital appreciation potential with a risk profile similar to a corporate bond index. The fund holds 100 equally weighted securities within the universe of the largest 1000 US stocks that have paid consistent or growing dividends and which have the highest dividend yields. Additionally, the fund shorts approximately 150 to 200 stocks, within the same universe, that have the lowest-to-no dividend history and low yields. Due to its indexing methodology, investors may find higher yields than dividend stocks while potentially hedging against volatility of equity markets.
Financial advisors who are interested in learning more about strategies for the current market environment can register for the Tuesday, May 28 webcast here.