Fast-growing buffer funds could help investors hedge election risks

[Pelican Press 0]

Fast-growing buffer funds could help investors hedge election risks

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Market volatility has been muted over the past year, though the futures market for the Cboe Volatility Index does show that traders are expecting movement to pick up at least a little bit around the election. “When there’s a known event like that, there’s always going to be a little bit of a premium for protection out there,” said Matt Thompson, a portfolio manager at Little Harbor Advisors. Little Harbor specializes in building volatility strategies for clients, though Thompson said it is a little too early to start hedging their portfolios. Of course, another way investors could protect their assets through the election is through short-term government debt or certificates of deposits from banks, where an annualized return of more than 5% is still available. However, ETF issuers point out that going the debt route can result in investors paying ordinary income taxes next year, as opposed to keeping the capital gain return in an ETF until they decide to sell. “If you compound that, that’s a massive, massive difference by compounding growth inside of the tax-deferred ETF wrapper,” Kaufman said.

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Investment strategy,Markets,CBOE Volatility Index,business news
#Fastgrowing #buffer #funds #investors #hedge #election #risks

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