We’re in a period of increased market volatility. Many think we’re heading into a recession, if not this year, then probably early next year. So, First Trust Advisors’ ETF strategist Ryan Issakainen said the firm has been focused on “positioning equities for what might work better in that recessionary environment.”
According to Issakainen, investors have this misconception that they should focus on mega-cap companies during a recessionary environment. After all, they’ve worked well in the past, tend to be well capitalized, and have access to cheap capital. But he suggested that targeting some of the smaller companies might work better in a recession environment.
“You tend to actually see better performance from mid-caps and small-caps. At least when you look back at previous recessions,” Issakainen said at Exchange 2024. “So that’s one of the things that we want to direct investors’ attention to.”
Issakainen told NYSE’s Judy Shaw that First Trust has “a number of solutions that might work well in that environment.” He pointed to the firm’s ETFs that are focused on factors. They target “higher-quality stocks, dividend-paying stocks, stocks that have more of an equal-weight bias instead of a market-cap weight bias.”
In particular, Issakainen cited the First Trust Value Line Dividend Index Fund (FVD) as “one of those ETFs that we think should work very well in this sort of economic environment.” First Trust’s AlphaDEX ETFs are also ideal for “where you’re building a portfolio not based on size but based on factors.”