While there’s rampant unemployment in Main Street, there’s been a lot of stock buying on Wall Street. “Shark Tank” television personality and chairman of O’Shares ETFs Kevin O’Leary credits institutional buying as the primary booster of U.S. equities right now.
With Treasury yields at historic lows, it’s also been slim pickings for fixed income opportunities.
“Institutional demand for equities is unprecedented given there are very few choices,” O’Leary said in a CNBC Monday on interview. “Your fixed-income option of government bonds in the U.S. used to be something you’d … consider. That’s no longer an option.”
While COVID-19 has certainly put a strain on cash-strapped companies, there are still some fixed income opportunities to be had if investors are willing to do the due diligence. For O’Leary, this means looking at companies with stable balance sheets that have the ability to pay dividends despite the economic tumult.
“That’s a very attractive place to park money for the next 24 months, and you’re seeing tremendous demand for it across the board,” O’Leary said. “It’s not the retail investor that’s driving this market. It’s institutional. I speak to them every day. And they’re saying, ‘What other choice do I have if my bogey over the next 12 months is 6%?’ There is no other choice.”
All this creates an opportunity for investors to capitalize on the Direxion FTSE Russell US Over International ETF (NYSEArca: RWUI). RWUI features:
- Seeks investment results, before fees and expenses, that track the Russell 1000®/FTSE All-World ex-US 150/50 Net Spread Index (the “index”).
- The fund, under normal circumstances, invests at least 80% of its net assets (plus borrowing for investment purposes) in securities that comprise the Long Component of the index or shares of ETFs on the Long Component of the index.
- The index measures the performance of a portfolio that has 150% long exposure to the Russell 1000® Index (the “Long Component”) and 50% short exposure to the FTSE All-World ex-US Index (the “Short Component”).
Investors looking to play the other side can use the Direxion FTSE International Over US ETF (NYSEArca: RWIU) to capitalize on international equities will outdoing U.S. equities. RWIU seeks investment results, before fees and expenses, that track the FTSE All-World ex-US/Russell 1000 150/50 Net Spread Index, which measures the performance of a portfolio that has 150 percent long exposure to the FTSE All-World ex-US Index and 50 percent short exposure to the Russell 1000® Index.
For more market trends, visit ETF Trends.