While the new year is certainly an exciting prospect for most folks, investors may have a bit of trepidation. A tactical strategy might be the right play.
There’s still a good number of reasons to be enthusiastic about the market for 2025. The Fed’s rate-cutting cycle can greatly pay off for both equity and fixed income investors. Additionally, pro-growth policies from an upcoming change in federal leadership could pay off for large caps.
However, investors may wish to remain vigilant in regards to potential headwinds. For example, proposed tariffs on some imports in the U.S. could very well lead to higher prices for consumers. Uncertainty is even popping up in regards to the Federal Reserve, with rising questions over the frequency and intensity of rate cuts that we may see in 2025.
Junctures like these may be a bit daunting for investors. This is where a tactical ETF can come into play. Typically, tactical ETFs will reassess and readjust their portfolio based on shorter-term market forecasts. These kinds of funds can work as excellent complementary pieces to a core strategy.
Tapping Into HCMT's Dynamic Strategy
Due in part to their active management, it can be best to choose a tactical ETF that has a proven track record for results. One such fund would be the Direxion HCM Tactical Enhanced US ETF (HCMT ). HCMT is built to provide long-term returns across a broad variety of market cycles.
“We look at our HCMT as a packaged vehicle for investors that want to try and generate alpha within their portfolio, as a satellite within their overall large cap holdings,” noted Ed Egilinsky, managing director and head of sales, distribution and alternatives at Direxion.
“The strategy is sub advised by Howard Capital Management, and employs a rule based proprietary HCM-BuyLine® strategy that will take an enhanced long exposure when the market is trending higher and seek to be in cash when the HCM-BuyLine® signal triggers a sell signal,” added Egilinsky. “ HCMT has produced outsized gains relative to the broader U.S. equity market indices YTD through 12/17, with the strategy up almost +50%.”
In instances where the market is displaying strength or a strong uptrend, HCMT invests in a broad selection of products to gain leveraged market and sector exposure. However, when there is a period of market downturn, the fund pivots to cash or cash equivalents to blunt potential losses.
Compelling Returns
HCMT’s track record certainly sells the case for why investors may wish to consider the fund. As of November 30, 2024, the fund’s NAV has skyrocketed a whopping 55% over the last twelve months.
“We are proud to work alongside Howard Capital Management on the HCMT ETF, a unique investment strategy which incorporates enhanced equity exposures as part of an active management trading model,” added Douglas Yones, CEO of Direxion.
With 2025 fast approaching, investor interest for the fund is certainly bubbling. FactSet data shows that the fund has seen over $16 million in inflows over the last month.
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