While the markets may have stabilized over the last week, investors should be wary of heightened volatility returning later this year.
Joseph Ferrara, vice president and investment strategist at Gateway Investment Advisers, highlighted this in a recent video. In particular, he pointed out that a number of factors in the second half of the year could lead to mounted market volatility.
These concerns are not simply limited to the upcoming U.S. presidential election, either. Ferrara noted that policy from the Federal Reserve could shift the market in one way or another. Ongoing financial conditions and the current business cycle could also throw a wrench in the market’s momentum.
So, how should investors prepare to deal with this? Ferrara asserted that a quality-focused portfolio can help investors lock in on companies well-suited to weather potential economic turmoil.
“We find the quality factor can really perform throughout market cycles, regardless of financial conditions,” he added. “The quality factor, based on our research, allows for companies to participate if we’re in an upward-trending market, but also provide protection if and when we see a market decline.”
Quality Control
Investors looking to zero in on a quality-focused portfolio can find great value from the Natixis Gateway Quality Income ETF (GQI). The fund aims to generate robust income while mitigating volatility concerns.
GQI’s portfolio strategy blends a selection of high-quality equity securities with monthly income from selling options. Quality equities can help activate reliable capital appreciation that can be positioned to handle unsteady market conditions.
Many of GQI’s top holdings are recognizable large-cap performers that can be anticipated to remain valuable down the line. These companies include Apple, Nvidia, Costco, and Walmart, among others.
Meanwhile, the option overlay allows QGI to offer investors robust monthly income. This strategy serves as a one-two punch for monthly cash flow as well as curation of long-term value.
Year-to-date returns for the fund highlight how a strong quality strategy can generate strong growth for a portfolio. As of August 21, 2024, GQI’s NAV has risen over 10% year to date.
For more news, information, and analysis, visit the Portfolio Construction Channel.