“They key thing would be we want to always continually get and stay invested,” said Azzarello. “And there’s ways to do that which make sense after a 10-year bull (market) so this doesn’t have to be cash on the sidelines or all into the market.”

“Rates going up is a good thing,” said Azzarello. “I know it doesn’t feel that way when fixed-income returns are going negative. However, at some point, we are going to benefit from some more income in the fixed-income market and it’s something that just has to happen.”

A Defensive Multi-Factor Approach

As the capital markets delve deeper into the late cycle and possibly into a corrective state if they haven’t already, Dahya believes that using a multi-factor approach combined with a defensive strategy is the best course of action moving forward.

“We take a multi-factor approach,” said Dahya. “From our point of view, factor timing is very difficult.”

“For most investors, just having a balance is enough,” Dahya said. “Value, quality and momentum–those are return enhancers in the portfolio–those should help you outperform by buying better stocks. The defense though, I think, is critical right now, which is maybe we should lean away from concentration and have more balance across sectors and stocks so they’re not taking very outsized bets.”

To watch the entire latest “In the Know” show, click here.

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