2022 was a tough year for equities. While the situation may have improved this year, Nuveen’s head of capital markets and managing director Briton Ryan pointed out at Exchange 2023 that “a lot of the headwinds we were facing in 2022 are still relevant today.” This includes high inflation, a tight monetary policy from the Federal Reserve, and “a revision of corporate earnings.”
“I think that [with] all these factors, we’re still going to see a lot of volatility in 2023, which is going to make asset allocation and managing the risk within portfolios pretty important,” Ryan said.
This is why the Nuveen executive told NYSE’s Judy Shaw for “ETF Leaders, Powered by the New York Stock Exchange” that he really likes the Nuven Dividend Growth ETF (NDVG). One reason why he likes this fund is that dividend-paying companies have an income stream that “can help smooth out the total performance returns of the products.”
So, investors who expect a volatile market “can pick something that’s going to smooth out the returns,” Ryan said. “That’s attractive in this type of environment.”
When thinking more about this particular environment with higher yields, Ryan said that companies growing their dividends and paying out the cash are doing so presumably “because they have cash on hand, so the idea that they need to refinance at higher rates or tap the debt markets at these higher rates… shouldn’t impact them the same way it may impact other companies.”
But since “this isn’t an environment where a rising tide lifts all boats,” NDVG being actively managed “really brings this fund to life, and it can benefit in this type of market environment,” he said.
“One of the things I really like about this particular fund is, while it suits this market environment very well, if you think about the S&P 500 since 1930, 40% of the annualized total returns have come from dividends and dividend reinvestments,” Ryan said. “So even over the long term, this isn’t a tactical investment. This should continue to work.”
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