Watch: New Solutions to Fixed Income Investment Challenges

Kelly HooverMarch 16, 2021


Fixed income investments are facing several challenges today, and these challenges will likely persist over the next several years.

Many bond positions are providing very low yields, face risk of price declines from rising interest rates, and are less protective when stocks fall deeply. You can learn more about the issues facing the fixed income market in this video.

Because of this, many are seeking investment solutions outside of the typical fixed income investment options. Our experts at Hoover Financial advisors are devising alternative solutions that can help our clients find a better approach to combat these challenges.

The two main solutions we’re recommending for many of our clients are hedged equity funds and defined outcome ETFs. These funds help solve the low-return challenges bonds face while also avoiding risk associated with increasing exposure to the stock market.

But what is a hedged equity fund? And how do you know if a defined outcome ETF is right for your portfolio?

Find answers to these questions and more information about how these strategies can benefit your portfolio in our latest video:

Seeking higher potential returns with downside protection

Both hedged equity funds and defined outcome ETFs provide unique benefits to investors. For those seeking another option to traditional bond exposure in today’s challenging fixed income market, there are a few things to consider.

Hedged equity funds may be able to provide you with:

  • As much as twice the returns bonds can
  • Only about 1% more volatility than bonds
  • Less than half the volatility of stocks

To gain exposure to hedge equity funds, we use the J.P. Morgan Hedged Equity Fund (JHEQX).

Defined outcome ETFs are another investment vehicle that can replace some of your traditional bond exposure. These funds are a creative, now patented use of equity indexes and options. They work by holding the S&P 500 and buffering the downside with PUT options. In doing so, this strategy can provide for higher upside than bonds while limiting downside.

Watch our video on how these fixed income alternatives work:

Looking for additional strategies to combat low fixed income returns?

Watch this video to learn the basics of dividend harvesting, another potential strategy your advisor may recommend you consider to diversity your portfolio.

At Hoover Financial Advisors, our mission is to help you achieve your financial goals. Please reach out to us with any questions (610-651-2777).


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