Despite the bout of market volatility, investors should not totally forsake investing in the markets and ETFs all together, but people should consider options to safely ride out the environment ahead.
“I think you can’t take your eye off the ball, and the ball is long-term investing,” Jon Maier, SVP and Chief Investment Officer for Global X, said at the Charles Schwab IMPACT 2018 conference.
“You have to think about diversification and your investors’ time horizon and overall goals,” he added.
After the year of volatility, there are a number of markets that have been battered and beaten down, which may be a buying opportunity for long-term investors to get in on the cheap. For example, the selling in the emerging markets, notably China, could be a cheaper entry point for many investors with a long-term horizon.
“Valuations are cheap and China is a long-term play. It’s down a huge amount this year for sure, but China – it is an emerging market – it’s a very special emerging market. It’s the second largest economy in the world. China is not going away,” Maier said.
Global X offers a number of sector-specific China ETF plays to help investors gain targeted exposure to the Chinese markets, including the Global X MSCI China Consumer ETF (NYSEArca: CHIQ), Global X MSCI China Energy ETF (NYSEArca: CHIE), Global XMSCI China Financials ETF (NYSEArca: CHIX), Global X MSCI China Materials ETF (NYSEArca: CHIM), Global X MSCI China Industrials ETF (NYSEArca: CHII) and Global X MSCI China Communication Services ETF (NYSEArca: CHIC).
Maier also argued that income remains a prominent theme with investors as many will have to adapt to the changing market environment.
“I think there’s a lot of value in income oriented stocks,” Maier said.
“We are seeing flows into some of our products like preferreds – PFFD, yielding, you know, in the five-and-a-half percent range,” he added.
Preferred stocks are a type of hybrid security that show bond- and equity-like characteristics. The shares are issued by financial institutions, utilities and telecom companies, among others. Within the securities hierarchy, preferreds are senior to common stocks but junior to corporate bonds. Additionally, preferred stocks issue dividends on a regular basis, but investors don’t usually enjoy capital appreciation on par with common shares.
The Global X U.S. Preferred ETF (Cboe: PFFD) features floating, variable and fixed-rate preferreds, which can help investors endure higher interest rates. PFFD shwos a 5.88% 30-day SEC yield.
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