The Evolution of ETFs Helped Investors Adapt to Changing Market Conditions
This article was originally published on ETFTrends.com.
ETFs have come a long way since first hitting the scene over two decades ago, and the industry continues to innovate and evolve to help investors meet today's challenges.
"I think the ETF industry is doing a pretty good job keeping up with the times and trends in the market place and responding to investors' needs with a whole variety of products and strategies that I think, especially in times like this, seem to have a place," Steve Cohen, Managing Director at ProShares, at the Charles Schwab IMPACT 2018 conference.
Related: ProShares Grooms New ETF for Pet Care Industry
At ProShares, which has been known for its leveraged and inverse ETF suite, the fund provider has been rolling out a number of alternative or smart beta ETF strategies.
For example, ProShares offers the popular ProShares S&P 500 Aristocrats ETF (Cboe: NOBL) , which is comprised of companies that have consecutively raised dividends for at least 25 years.
Additionally, investors can look to the ProShares Russell 2000 Dividend Growers ETF (Cboe: SMDV) and the ProShares S&P MidCap 400 Dividend Aristocrats ETF (Cboe: REGL) for those seeking quality dividend growers in the small- and mid-cap categories, respectively.
"Quality is the name of the game today and that's what those products tend to deliver," Cohen said.
Fixed-income investors who are looking for strategies in a rising rate environment could look at specialized strategies designed for hedging against rising rates.
For example, the ProShares Investment Grade-Interest Rate Hedged ETF (Cboe: IGHG) and ProShares High Yield Interest Rate Hedged ETF (Cboe: HYHG) are two rate hedged ETF strategies that try to eliminate the rising rate risks. The two rate-hedged bond ETFs achieve their diminished rate-risk status by shorting Treasury notes so that the underlying portfolio shows a near-zero duration – duration is a measure of sensitivity to changes in interest rates, so a zero duration translates to no sensitivity to changes.
"We've got bond funds that are hedging interest rate risk out to respond to the rising rate environment and protect investors when times are tough and rates rise," Cohen added.
Finally, Cohen also discussed its newest fund - the ProShares Pet Care ETF (PAWZ).
"It's the first pet care ETF of its kind," Cohen said. "The pet care industry is going through an incredible transformation. You've got ownership of pets, which is going way up. The second trend is the spending habits - there's no much you wouldn't do for your dog."
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