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4 defensively-oriented strategies to consider in 2019

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6 år sedan

den

24 januari, 2019

Global markets, led largely by US equities, have been treated to a fairly robust period since the Global Financial Crisis of 2008-09. As 2019 begins, investors are beginning to think about what might happen if that next recession actually materializes, as the US has undergone what is now close to the longest ever economic expansion in the post World War Two period. Importantly, measures of volatility indicate a higher overall level of risk, relative to either the start of 2017 or the start of 2018.

In such environments, we believe that investors might be thinking about positioning their investment strategies in a more defensively-oriented manner. There still could be good reason to hold risky assets, as late cycle rallies can and do occur, but it may now be more important to mitigate downside risk.

We’d cite the age-old investment truism—if a portfolio loses 50% of its value, what is the rate of return required to get back to even? While many might initially say “50%”, the true answer is 100%. Strategies that lead to the potential for less negative returns in tougher markets can therefore be quite valuable.

At WisdomTree, we can think of four primary means to mitigate the risk that a given strategy drops significantly in a given downturn. Unfortunately, they don’t always work to the same degree and they aren’t guaranteed to work across every market downdraft, but they are important to keep in mind nonetheless.

Strategy 1: Find historically low valuations.

When investors locate valuations that are at or near historic lows, this can be an important signal that a lot of risks that may be dominating the headlines have been priced in. Another way to think of this is that all the reasons to worry have already caused the market in question to decline, so absent even more, new and surprising reasons to worry, it could be tough for that market to decline further. There is word commonly associated with this type of strategy: Contrarian.

Possible markets to consider on this basis: Emerging markets, Italian equities—particularly Italian financial sector, and Japanese equities.

Strategy 2: Find high dividend yielding stocks

One aspect of this strategy considers that, in equities, there is always a dividend component and a price component of a given total return calculation. The dividend component, at worst, can be zero, in that there are no dividends, whereas the price component can clearly be positive, zero, or negative. A strategy focused on higher yielding stocks is tilting more of the total return’s generation towards dividends and way from prices, and, since the dividend component of the return is less volatile, this is one way to lower the risk of an equity strategy.

The other aspect to consider regards the fact that higher yielding stocks tend to be found in more defensively oriented sectors, such as utilities. Tilting exposure toward these sectors can be another potential avenue through which the total risk of an equity strategy can be lowered.

Possible markets to consider on this basis: Emerging markets equities, European equities, and US equities.

Strategy 3: Sell assets that have positive price correlation to volatility

Using history as our guide, when equity markets enter severely negative trends, it has been typical to see measures like the Cboe Volatility Index (VIX) spike in the upward direction. The VIX has an important signalling capability, in that it indicates the forward-looking expectations of future volatility for the S&P 500. If the VIX is higher, it means that forward-looking expectations of volatility are expected to be higher. Certain assets like put options that have the S&P 500 as their underlying index would tend to see their prices rise in accordance with the rising VIX levels.

There is a well-known strategy where one can sell put options on the S&P 500, thereby collecting the premiums. The case for any put-writing strategy is of course directly tied to the underlying index upon which the options themselves are being written. If the premiums can tend to rise along with a rising VIX, what this indicates is a potential for the cushioning of downside risk during tougher market environments.

In the US, equities had reached record highs in early October of 2018 and valuations were quite high relative to other global markets. Record high prices and high relative valuations do tend to give investors more cause for concern to worry about downside risk, and this concern in our view is a critical catalyst for considering a put writing strategy.

Possible markets to consider on this basis: US equities.

Strategy 4: Don’t forget about traditional “safe haven” assets

Each of the first three strategies takes an approach to lower the risk of a given exposure either to equities directly or to something with high correlation to equities. We recognize that as volatility picks up, holding equities may become a less desirable approach whether or not is using some form of risk mitigation within the approach.

If volatility is increasing due to the perception of increased geopolitical risk, gold may be worth considering. Historically, when investors have been concerned about unexpected events or surprised by the direction politics takes in a major country, gold has been associated with delivering a differentiated return stream as compared to equities.

Another avenue might regard certain currencies, such as the US Dollar or Japanese Yen. These currencies have indicated a capability to increase in value as volatility has increased.

Possible markets to consider on this basis: Gold, US Dollar, Japanese Yen

Due to recent events, we have focused here on more defensively-oriented angles here. If investors are uncertain in their 2019 positioning, these approaches may lower their overall portfolios risk. For more information, visit WisdomTree.com.

DISCLAIMER

The content on this document is issued by WisdomTree UK Ltd (“WTUK”), which is authorised and regulated by the Financial Conduct Authority (“FCA”). Our Conflicts of Interest Policy and Inventory are available on request.

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Spotlight on the tariff war

Publicerad

21 timmar sedan

den

5 april, 2025

Redaktionen

The impact of US tariffs continues to dominate market sentiment and risk assets, including crypto, struggled with this uncertainty throughout the month. The Nasdaq Crypto Index™ (NCI™) fell 4.46% in March as the S&P 500 and Nasdaq 100 dropped 5.63% and 7.61%, respectively.

Despite the macro uncertainty from Washington, US policymakers are continuing to embrace crypto in an unprecedented way, including launching a Bitcoin Strategic Reserve, Digital Asset Stockpile, and engaging in expansive work at the regulatory agencies and in Congress.

Our team spent the last week of the month in Washington, meeting with regulators to share our experiences and views on what’s most important for crypto investors in the US. In his latest Notes from the CIO, Samir Kerbage shares what he learned from these meetings and how investors should be thinking about the new regulatory regime in the US.

As always, we are greatly appreciative of your trust in us and are here to answer any questions you may have.

-Your Partners at Hashdex

Market Review

March was marked by the tariff dispute triggered by the Trump administration. Back-and-forth fiscal policies, threats, and retaliations dominated the month’s agenda. The uncertain macroeconomic environment put investors into a defensive stance and negatively impacted crypto assets. The Nasdaq Crypto Index™ (NCI™) closed the month down -4.46% after a period of high volatility. Major market indices, the S&P 500 and Nasdaq-100, also recorded steep declines of -5.63% and -7.61%, respectively. These concurrent drawdowns across equities and crypto underscored March’s broad market caution, as trade war uncertainty prompted investors to flee risk assets.

During times of uncertainty, it is common to observe increased correlation among different classes of risk assets. This pattern played out in March: the 6-month rolling correlation of monthly returns between the NCI™ and the Nasdaq-100 surged to roughly 0.91 (see chart below), its highest level since 2021, indicating that crypto assets were moving almost in lockstep with tech stocks. This spike in correlation confirms that crypto was behaving like a high-beta extension of the tech sector—an amplified version of the Nasdaq-100. The lack of clarity in the global landscape leads investors to reduce their risk exposure and seek protection, a movement known in financial markets as “risk-off” allocation.

6-Month Rolling Correlation of Monthly Returns between the Nasdaq Crypto Index and Nasdaq-100 (Apr 2021–Apr 2025).

The chart illustrates how this correlation has been increasing since the American elections in November 2024 and spiked to approximately 0.91 in the most recent period—a multi-year high. This visual evidence reinforces the view that crypto assets have been moving closely in tandem with tech stocks, effectively acting as a high-beta version of the Nasdaq-100 during the March risk-off phase.

Following this trend, risk reduction was evident within the crypto asset class. Among the NCI’s constituents, Bitcoin (BTC) posted a decline of -1.93%, withstanding the downturn far better than other constituents such as Ether (ETH, -17.4%) and Litecoin (LTC, -34.6%). BTC’s relatively mild drop in this sell-off aligns with the idea that it increasingly trades like a high-beta proxy for large-cap tech. It still declined, but less severely, whereas smaller-cap crypto assets behaved more like speculative growth stocks and suffered outsized losses. The only exception to the negative results was Cardano (ADA), which surprised with a positive return of 3.88% despite no significant protocol developments during the month.

Thematic indices also faced a challenging environment. As highlighted in previous letters, smaller capitalization assets tend to suffer more during periods of market stress, mirroring how speculative small-cap stocks are hit hardest in equity sell-offs. The biggest negative highlight was the Digital Culture Index, which dropped -17.45%, followed by the Decentralized Finance (DeFi) and Smart Contract Platform (Web3) indices, which fell -16.73% and -12.07%, respectively. The Vinter Hashdex Risk Parity Momentum Index recorded a negative result of -8.26% but outperformed the three other thematic indices, benefiting from its high allocation in BTC and TRX (which gained 4.68%). The heavy weighting in BTC – the more resilient large-cap crypto – helped cushion this index, underscoring the relevance of the momentum factor in a well-diversified strategy during times of market stress.

The market remains on the lookout for the outcome of the fiscal policy discussions, hoping for a reduction in uncertainties and an end to the tariff war. That would likely mark the moment when investors regain their appetite for risk assets, including crypto assets. The U.S. government has also signaled interest in advancing the crypto agenda, a development that could drive the asset class to a new level of adoption. We remain confident in our positive outlook for the rest of the year and the long term.

US creates Bitcoin Strategic Reserve and Digital Asset Stockpile

The Bitcoin Reserve will be capitalized with BTC owned by the Department of Treasury, which could further increase via new budget-neutral acquisitions. The stockpile will also include assets owned by the Treasury. This marks a major milestone, with the US government starting to integrate major crypto assets and continues the new administration’s work to lead the global crypto economy.

Stablecoins surpass $230 billion in market value

The total stablecoins market capitalization surpassed $230 billion amid institutional demand for dollar-backed digital assets. This showcases one of the most successful applications for crypto technology enhancing traditional financial payments. It could also pave the way for new use cases that require a strong and reliable global payment system.

FDIC eases banks’ ability to engage in crypto activities

The FDIC has rescinded previous guidelines which prevented financial institutions from engaging with crypto activities without prior sign-off. By removing bureaucratic hurdles, banks may more readily over crypto-related services, potentially leading to broader adoption and integration of digital assets into the financial system.

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BSE8 ETF ger exponering mot företagsobligationer med förfall under 2028

Publicerad

22 timmar sedan

den

5 april, 2025

Redaktionen

Invesco BulletShares 2028 EUR Corporate Bond UCITS ETF EUR Acc (BSE8 ETF) med ISIN IE00079EUF59, försöker följa Bloomberg 2028 Maturity EUR Corporate Bond Screened-index. Bloomberg 2028 Maturity EUR Corporate Bond Screened Index följer företagsobligationer denominerade i EUR. Indexet speglar inte ett konstant löptidsintervall (som är fallet med de flesta andra obligationsindex). Istället ingår endast obligationer som förfaller under det angivna året (här: 2028) i indexet. Indexet består av ESG (environmental, social and governance) screenade företagsobligationer. Betyg: Investment Grade. Löptid: december 2028 (Denna ETF kommer att stängas efteråt).

Den börshandlade fondens TER (total cost ratio) uppgår till 0,10 % p.a. Invesco BulletShares 2028 EUR Corporate Bond UCITS ETF EUR Acc är den billigaste och största ETF som följer Bloomberg 2028 Maturity EUR Corporate Bond Screened index. ETFen replikerar det underliggande indexets prestanda genom samplingsteknik (köper ett urval av de mest relevanta indexbeståndsdelarna). Ränteintäkterna (kupongerna) i ETFen ackumuleras och återinvesteras.

Invesco BulletShares 2028 EUR Corporate Bond UCITS ETF EUR Acc är en mycket liten ETF med tillgångar på 6 miljoner euro under förvaltning. Denna ETF lanserades den 18 juni 2024 och har sin hemvist i Irland.

Produktbeskrivning

Invesco BulletShares 2028 EUR Corporate Bond UCITS ETF Acc syftar till att tillhandahålla den totala avkastningen för Bloomberg 2028 Maturity EUR Corporate Bond Screened Index (”Referensindexet”), minus avgifternas inverkan. Fonden har en fast löptid och kommer att upphöra på Förfallodagen.

Referensindexet är utformat för att återspegla resultatet för EUR-denominerade, investeringsklassade, fast ränta, skattepliktiga skuldebrev emitterade av företagsemittenter. För att vara kvalificerade för inkludering måste företagsvärdepapper ha minst 300 miljoner euro i nominellt utestående belopp och en effektiv löptid på eller mellan 1 januari 2028 och 31 december 2028.

Värdepapper är uteslutna om emittenter: 1) är inblandade i kontroversiella vapen, handeldvapen, militära kontrakt, oljesand, termiskt kol eller tobak; 2) inte har en kontroversnivå enligt definitionen av Sustainalytics eller har en Sustainalytics-kontroversnivå högre än 4; 3) anses inte följa principerna i FN:s Global Compact; eller 4) kommer från tillväxtmarknader.

Portföljförvaltarna strävar efter att uppnå fondens mål genom att tillämpa en urvalsstrategi, som inkluderar användning av kvantitativ analys, för att välja en andel av värdepapperen från referensindexet som representerar hela indexets egenskaper, med hjälp av faktorer som index- vägd genomsnittlig varaktighet, industrisektorer, landvikter och kreditkvalitet. När en företagsobligation som innehas av fonden når förfallodag kommer kontanterna som fonden tar emot att användas för att investera i kortfristiga EUR-denominerade skulder.

ETFen förvaltas passivt.

En investering i denna fond är ett förvärv av andelar i en passivt förvaltad indexföljande fond snarare än i de underliggande tillgångarna som ägs av fonden.

”Förfallodag”: den andra onsdagen i december 2026 eller sådant annat datum som bestäms av styrelseledamöterna och meddelas aktieägarna.

Handla BSE8 ETF

Invesco BulletShares 2028 EUR Corporate Bond UCITS ETF EUR Acc (BSE8 ETF) är en europeisk börshandlad fond. Denna fond handlas på Deutsche Boerse Xetra.

Det betyder att det går att handla andelar i denna ETF genom de flesta svenska banker och Internetmäklare, till exempel DEGIRO, Nordnet, Aktieinvest och Avanza.

Börsnoteringar

Börs	Valuta	Kortnamn
XETRA	EUR	BSE8

Största innehav

Namn	CUSIP	ISIN	Kupongränta	Vikt %
Volkswagen Leasing GmbH 3.875% 11/10/28	D9T70CNQ3	XS2745725155	3,875	2,19%
Swedbank AB 4.25% 11/07/28	W94240FJ7	XS2572496623	4,250	1,63%
ABN AMRO Bank NV 4.375% 20/10/28	N0R37XLP3	XS2613658710	4,375	1,62%
Carlsberg Breweries AS 4% 05/10/28	K3662HDY6	XS2696046460	4,000	1,60%
RCI Banque SA 4.875% 14/06/28	F7S48DSE5	FR001400IEQ0	4,875	1,59%
Booking Holdings Inc 3.625% 12/11/28	—	XS2621007231	3,625	1,59%
Banco Santander SA 3.875% 16/01/28	E2R99DB46	XS2575952697	3,875	1,58%
Nordea Bank Abp 4.125% 05/05/28	X5S8VP8C3	XS2618906585	4,125	1,58%
E.ON SE 3.5% 12/01/28	D2T8J8CT1	XS2574873266	3,500	1,57%
General Motors Financial Co Inc 3.9% 12/01/28	U37047BA1	XS2747270630	3,900	1,57%

Innehav kan komma att förändras

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En vecka för historieböckerna…

Publicerad

23 timmar sedan

den

5 april, 2025

Redaktionen

Det senaste vecan var den värsta veckan för världens aktiemarknader sedan covid-lockdown-kollapsen i mars 2020. Det var dessutom den värsta vecka för amerikanska aktier sedan covid-lockdown-kollapsen i mars 2020.

Det senaste veckan var den värsta veckan för världens aktiemarknader sedan covid-lockdown-kollapsen i mars 2020. Det var dessutom den värsta vecka för amerikanska aktier sedan covid-lockdown-kollapsen i mars 2020.

Det amerikanska referensindexet NASDAQ gick tillsammans med i Russell 2000, ett amerikanskt aktiemarknadsindex för småbolag i björnmarknadens territorium när dessa båda index fallit med över 20 procent från sina toppnoteringar. Samtidigt föll amerikanska Dow Jones med 2 200 punkter under fredagen.

Den grupp av företag som kallas för Mag 7 och har drivit börsuppgången på den amerikanska aktiemarknaden, tappade 1,4 biljoner dollar i börsvärde under veckan – det mest någonsin.

Fredagen den 4 april såh den högsta volymsessionen i historien på den amerikanska aktiemarknaden mätt som det totala antalet omsatta aktier på alla börser.

Det amerikanska VIX-indexet, känt som ”fear and greed-indexet” såg sin största veckorörelse sedan februari 2020. Det var också den värsta veckan för USAskreditmarknader sedan covid-lockdown-krisen, till och med värre än under SVB-bankkrisen.

Oljepriset kraschade med 11 procent under veckan, det största fallet sedan mars 2023 (SVB-kris / tillväxtskräck). Samtidigt rapporterade guldpriset den andra nedgångsvecka i år. Fredagen kursfall var den värsta dagen sedan november 2024. Priset på koppar såg sitt största fall sedan Lehman-kraschen i oktober 2008. Kryptovalutan Bitcoin rapporterade små vinster under veckan.

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