Following a rocky ride to end 2018, investors are picking themselves up in 2019 by looking for smoother paths to gains. This can be had by deploying capital more strategically, but how can an investors accomplish this?
The answer can be through the use of alternative and thematic investment strategies. However, one of the challenging aspects advisors face with this approach is the plethora of options available for their clients, especially in the exchange-traded fund (ETF) space.
These tools will be discussed in greater detail on Wednesday, Apr. 17, 2019 as ETF Trends will give financial advisors the opportunity to congregate in a cutting edge virtual setting.
Step 1: Getting Educated
When volatility rears its ugly head, this can be a beautiful thing to the short-term trader, but a scary thing for investors who don’t know how to handle market events strategically. It’s one thing to minimize risk, but another to take action whenever markets don’t behave accordingly.
ETFs can now be used to hedge or short markets so investors have opportunities to make gains or minimize losses regardless of what the markets are doing. As an example, Direxion Investments’ leveraged and inverse products have given investors access to an investment space that was typically relegated to only high-net worth individuals or institutions.
With the transparency and liquidity of an ETF wrapper that incorporates multiple hedge fund strategies, Direxion opens up the arena to all types of investors irrespective of net worth. As such, the investment space is getting more sophisticated and so are its investors who are using these strategic tools more and more.
“Now, with volatility, we’re really happy actually to see that traders are going in and out,” Sylvia Jablonski, Managing Director, Capital Markets – Institutional ETF Strategist, who will be presenting at the Virtual Summit. “They’re going into the bull fund when we see a rally for a couple of days and then they’re going right back into the bear fund when the markets turn. I think that education has really driven the point home that there are short-term, tactical trading tools and investors seem to get it.”
Jablonski cites education as a prime catalyst for investors no longer buying and holding the short-term trading products and rather, using them for what they’re intended to do. Advisors will be exposed to this type of education at the Virtual Summit with experts like the following joining Jablonski:
- Meb Faber: CEO and CIO at Cambria Investment Management
- Bill DeRoche: CIO and Portfolio Manager at AFGiQ
Step 2: Using What Your Learn
One of the strategies to discuss include allocating capital overseas because like sports, it can also be easy to cheer for the home team when it comes to making investments. In the U.S. capital markets, this would be akin to investors keeping their capital allocated domestically.
For example, in the fixed income space, certain areas overseas may be earlier in their market cycles compared to the U.S. so issues like rate risk are not yet a concern. Additionally, bond markets overseas could provide more competitive yields when compares to those of the U.S. where a credit risk in a late market cycle could pose a concern.
However, as the U.S. capital markets make their way out of the late cycle, it can be opportunities overseas that can be more attractive alternatives. This casting aside of the home bias and looking to opportunities overseas is just one aspect of alternative and thematic tools.
At the Virtual Summit, registrants will also learn:
- Why advisors are increasing allocation to alternatives now
- The best ETF tools and strategies to diversify away from the S&P 500
- New opportunities to maximize returns with minimum volatility
- How to position new thematic strategies in an investment portfolio
Make sure to register now and take advantage of this educational opportunity.
For more market trends, visit ETF Trends.