The world can be an awful lot right now. Between contentious midterm elections, a Fed determined to raise rates and increase unemployment despite other options for dealing with inflation, and the increasing likelihood of a recession, advisors are found in want of effective solutions for navigating these trying markets.
Fortunately, there are some interesting options worthy of exploration. Here are a few things you can look into to help your clients’ portfolios survive and thrive despite the bleak economic outlook.
Managing the Uncertain Future Through Managed Futures
The surprise superstar of performance this year is managed futures, such as the iMGP DBi Managed Futures Strategy ETF (DBMF ). In a recent ETF 360, Dynamic Beta Investment’s Andrew Beer said, “What got us interested in this space is called ‘crisis alpha.’” Managed futures perform historically well during trying times, and this year has been no exception. While the S&P cratered 22% YTD, managed futures are up over 20%.
According to Beer, “what we say about managed futures is that it has more diversification bang for the buck than just about any other strategy you could find.” Beer describes DBMF as a “hedge fund replication strategy” and believes that managed futures should be in everybody’s portfolio.
When the Going Gets Tough, the Tough Get Buffered
Another strategy worth looking at is defined outcomes. Innovator has a unique suite of these buffered products, which provide downside protection to help investors mitigate potential losses when they arise while still being able to tap into the upside. Buffered funds have seen a whopping $6 billion in inflows this year.
While buffered products do tend to have higher fees, according to NCDR Inc. chief investment officer Roni Israelov, “These strategies are built to have less risk than the stock market.”
The NightShares are the Right Shares
Three of the most compelling funds on the market are the NightShares 500 1x/1.5x ETF (NSPL ), the NightShares 500 ETF (NSPY ), and the NightShares 2000 ETF (NIWM ). These funds attempt to capture “the night effect,” the tendency of overnight markets to outperform the daytime trading session on a risk-adjusted basis.
Finding the Right Venue to Exchange Ideas
Finally, advisors can unearth more unique ideas and strategies at the fast-approaching ETF conference, Exchange: An ETF Experience.
After a splashy debut last year, Exchange is returning February 5th through February 8th and promises to provide advisors with an opportunity to see experts and thought leaders speak on the pressing issues of the moment and dig into unique solutions for times unlike any that have come before. Exchange will also offer advisors a platform to connect and grow their networks. Registration can be made here.
For more information, please visit VettaFi.