As inflation and energy market volatility persists, consumer confidence and buying power have faltered. But pockets of opportunities still exist, including in utilities, asset-backed securities, and even bonds.
In the upcoming webcast, For Inflation-Fighting in a Volatile Market, Follow the U.S. Consumer, James Jessup, income strategist at Virtus ETFs; John Bartlett, president, portfolio manager, and research analyst at Reaves Asset Management; Zachary Szyndlar, director, portfolio manager, and credit analyst, securitized products at Newfleet Asset Management; and Andrew Szabo, portfolio manager, agency and residential mortgage-backed securities at Newfleet Asset Management, will discuss strategies designed to help advisors diversify their client portfolios in times of heightened inflationary pressures.
For example, the broad Newfleet Multi-Sector Unconstrained Bond ETF (NYSEArca: NFLT) helps target the right areas of the global bond market at the opportune times, implementing active sector rotation and disciplined risk management to achieve long-term excess returns. The unconstrained investment style does not require a manager to adhere to a specific benchmark. Instead, unconstrained strategies allow a manager to focus on returns across many asset classes and sectors, and the styles typically have a more long-term horizon. Moreover, a portfolio manager may use derivatives and other alternative asset classes to hedge market exposure.
NFLT will analyze the value assessment of sectors to determine underweights and overweights, along with interest rate outlook and sector allocation targets. Next, the team will look at fundamentals and assess credit risks, company management, issue structure, and technical conditions. Lastly, the managers will select high-conviction picks across 14 sectors, without restrictions on speculative-grade or non-U.S. securities.
The Virtus Newfleet ABS/MBS ETF (NYSE: VABS) can also complement a traditional fixed income portfolio. The ABS (auto loans, equipment leases, credit card receivables, student loans, etc.) and MBS (pools of mortgages, both residential and commercial, agency and non-agency) sectors provide a broader investment opportunity set and much-needed diversification relative to traditional fixed income. With an emphasis on the out-of-index, niche areas of the securitized credit markets, Newfleet’s securitized credit specialists employ their hallmark relative value approach, exploiting inefficiencies by continuously evaluating the market sectors and securities.
Additionally, the Virtus Reaves Utilities ETF (UTES) seeks to provide total return through a combination of capital appreciation and income. The fund invests not less than 80% of its net assets (plus the amount of any borrowings for investment purposes) in equity securities of companies in the utility sector (“Utility Sector Companies”).
The manager considers a company to be a “Utility Sector Company” if at least 50% of the company’s assets or customers are committed to, or at least 50% of the company’s revenues, gross income, or profits derive from, the provision of products, services, or equipment for the generation or distribution of electricity, gas, or water. The fund is non-diversified.
Financial advisors who are interested in learning more about inflation hedging strategies can register for the Tuesday, September 13 webcast here.