For this week’s episode of ETF 360, ETF Trends CEO Tom Lydon and CIO Dave Nadig spoke with Johan Grahn, Head of ETFs and Product Strategy for Allianz Investment Management, who discusses the recent jump the company has made into ETFs.
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With advisors trying to manage risk, Grahn notes that diversification remains straightforward. However, finding yield and income remain difficult, given everything going on with equities and inflationary concerns on the bond market side. For Allianz, Grahn states how many advisors are looking for different ways to manage their portfolios.
Among those options are “options” – buffered products in the form of the AllianzIM Buffered Outcome ETFs (including AZBO, AZAO, and AZBA), which Allianz can use to turn equities into something closer to bonds. It allows the firm to build something structured inside of something that’s really liquid. It provides a lot of confidence in terms of how to invest assets.
“It’s a good tradeoff,” Grahn states. “It resonates with many advisors in terms of thinking about how you can replace part of your fixed income allocation into something that might give you a little more juice while giving you enough reasons to sleep well at night.”
Looking at all the recent volatility, the allocation products from Allianz allow for a couple of ways to take on various challenges by resetting the cap and buffer after a certain amount of time. Assets can also be spread across the different buffered products to lock in the gains and avoid falling into some tax trigger areas.
As far as expectations going forward in the equity market, things are not too optimistic. With a cap on this buffered ETF, there’s still a good chance of being able to reset and lock in on gains in the market every three months. With the use of options, the more volatile the equity market, the higher the cap will be, which means volatility favors the cap that can be gained from these products.
“When things get really hairy in the equity market, you actually stand a bigger opportunity to get more out of it as it’s coming back.”
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