This article was originally published on ETFTrends.com.
As markets surge and then sputter, the prospects of downside risk loom large in the short term. Yet advisors have to meet the challenge of steering through periods of market volatility, while continuing to capture at least a portion of any upside potential for their clients. In an age of passive index domination, doing so requires an open-minded but disciplined approach to portfolio management.
On the upcoming webcast, Potential ETF Strategies for Today’s (and Tomorrow’s) Markets, Sylvia Jablonski, Managing Director and Institutional ETF Strategist for Direxion and Portfolio+ ETFs, and John Davi, Founder and Chief Investment Officer of Astoria Portfolio Advisors, will consider ways to construct resilient portfolios to participate on the upside and hedge the downside.
For example, investors can look to a relatively new family of ETFs, called Portfolio+ ETFs, which can potentially enhance a bullish stance by providing 25% added daily exposure to popular broad-based indexes targeted by advisors. The ETFs include the Portfolio+ S&P Mid Cap ETF (PPMC) , Portfolio+ Developed Markets ETF (PPDM) , Portfolio+ Emerging Markets ETF (PPEM) , Portfolio+ Total Bond Market ETF (PPTB) , Portfolio+ S&P 500 ETF (PPLC) and Portfolio+ S&P Small Cap ETF (PPSC) .
The lightly leveraged solutions can be applied to common asset allocation strategies to seek greater upside potential over time. If investors believe that a portfolio offering 100% exposure to the markets is good, it stands to reason that a portfolio with 125% exposure can be better, even after full consideration of the potential risks.
These products do well in trending markets. They offer great upside potential. If you believe markets will generally rise over time — and agree that times of high volatility are infrequent and short lived — you can believe that these products will work for you.
Minimize Potential Effects of a Correction
Investors can also consider various tactical trading strategies to minimize potential effects of a correction in an extended bull market environment.
For instance, the Direxion Daily S&P Oil & Gas Exploration & Production Bull 3x Shares (GUSH) and Direxion Daily S&P Oil & Gas Exploration & Production Bear Shares (DRIP) , which take the +/-3x or +/-300% daily performance of the S&P Oil & Gas Exploration & Production Select Industry Index, can help traders gain exposure to the swings in the crude oil industry after oil prices plunged and seek to consolidate in light of ongoing concerns over a global supply glut.
Additionally, the Direxion Daily 20+ Year Treasury Bull 3x Shares ETF (TMF) and Direxion Daily 20+ Year Treasury Bear 3x Shares ETF (TMV) , which tracks the 300% long and short daily performance of the NYSE 20 Year Plus Treasury Bond Index, respectively, have been popular ways to more aggressive exposure to the shifts in the Treasury market. With the Federal Reserve embarking on interest rate normalization and a tighter monetary policy, bond traders should be wary of the potential ramifications after a three-decade long bull run in the fixed-income space.
Financial advisors who are interested in learning more about investment strategies for today's markets can register for the Tuesday, June 19 webcast here.
POPULAR ARTICLES FROM ETFTRENDS.COM
- When Can I Retire? Two Calculations to Find the Answer
- Start Understanding Your Mortgage in Fewer Than 10 Minutes
- Bettinger on Schwab’s Evolution And Important Industry Trends
- Gen Z Employees Are Stressed About Money, but Remain Confident
- Are You Shopping for a Home With Bitcoin?