Amid hopes that the conflict in Iran will soon de-escalate, stocks rallied in recent days. This provided some much needed relief for the growth-heavy Nasdaq-100 Index (NDX). However, advisors and experienced investors know that things can change in a heartbeat. Fortunately, there are ways for market participants to position for the possibility of a sustained rebound while sprinkling in some downside protection. The NEOS Nasdaq-100 Hedged Equity Income ETF (QQQH ) is a prime example of an ETF that accomplishes those objectives.
And don’t forget about the income. QQQH carries a distribution rate of 8.91%, well in excess of what’s found traditional NDX-tracking ETFs.
In the current environment and beyond, QQQH has a lot to offer a broad array of investors. As deVere Group’s Nigel Green points out, the recent downside incurred by tech stocks has made the sector the cheapest it’s been relative to the broader market in eight years. On the other hand, domestic political policy can be turbulent. There’s no telling when geopolitical tensions can flare up. Therefore, the downside protection offered by QQQH is appealing in its own right.
QQQH Leans Into Flexibility
Another thing advisors and seasoned investors know is that it pays to be flexible, but many passive funds are rigid. QQQH is not. With the help of active management, the options-based ETF is responsive and flexible at a time when market participants need good measures of both traits. Not to be forgotten is the potential of the NEOS to capitalize on the unusual market conditions seen today.
“This is a rare moment. Tech has historically traded at a meaningful premium to the broader market because of its superior earnings growth, balance sheet strength and global dominance,” added Green.
As often said, market history doesn’t always repeat, but it often rhymes, implying that more upside could be in store for NDX and large-cap growth stocks. Of course, it doesn’t hurt to prepare for the unexpected. QQQH helps investors do just that while potentially positioning for some upside as market participants awaken to the fact that many marquee NDX constituents remain fundamentally sturdy.
“Investors are seeing access to some of the most dominant and innovative companies in the world at valuations that are unusually close to the broader market. That dynamic has historically been relatively short-lived,” concluded Green.
For more news, information, and analysis, visit the Tax Efficient Income Content Hub.
