U.S. markets delivered attractive returns in January, but global economic uncertainty remains a key theme for the year.
The macroeconomic situation is expected to remain difficult and uncertain throughout 2024, with widespread uncertainty around interest rates, elections, and changing policy, and the possibility of a recession.
Notably, 2024 will be the biggest election year in history as over half the global population resides in countries holding national elections. Economists anticipate this will translate to continued uncertainty in international markets.
Investors may be well positioned to navigate the current environment with an ETF offering downside protection, such as the Parametric Hedged Equity ETF (PHEQ ).
PHEQ participates in U.S. large-cap equity market performance while seeking to mitigate losses through an option overlay hedging strategy. The fund can potentially reduce equity volatility.
“There is high market uncertainty given the pending shift in monetary policy,” Todd Rosenbluth, head of research at VettaFi, said. “Advisors have many choices to manage risk, but Parametric has extensive expertise being leveraged with PHEQ.”
Parametric has industry-leading capabilities in options-based equity risk management solutions, which are leveraged with PHEQ. The fund, which charges 29 basis points, is a low-cost efficient offering that seeks competitive risk-adjusted performance, according to Parametric.
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How Parametric’s Hedged Equity ETF Has Performed Since Inception
PHEQ was launched in October 2023 and has gathered $22 million in assets under management.
The hedged equity ETF has gained 8.8% since its inception through February 1. The fund is up 9.7% in the past three months and up 1.5% year to date.
Notably, the option overlay offered with PHEQ was previously something that Parametric employed primarily for institutional clients. Now, this feature is accessible to a broader range of investors through the ETF wrapper.
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