FMD Capital Management

Posts Tagged: hedge

Comparing Bond ETFs: Same Yield, Less Interest Rate Risk

Written by David Fabian, January 16th, 2018

The two biggest risks that bond investors face are rising inflation and rising interest rates. This dual threat has been moderated for many years now as global central banks set accommodative policies to boost asset prices. The ultimate result of which has been tame inflationary metrics, steady jobs growth, corporate earnings expansion, and firm declines in Treasury yields.

The more recent roundabout (or tightening) of Federal Reserve fiscal policy has created a unique environment for bond investors to evaluate. Namely a flattening yield curve, whereby the 2-year U.S. Treasury Yield is sharply rising compared to its 10-year and 30-year counterparts.

Read the complete article at NASDAQ.com

Investors May Not Be Worrying About Downside Risks, But ETF Issuers Are

Written by David Fabian, June 06th, 2017

Complacency in the stock market is almost palpable as $300 billion has flowed into ETF coffers since the U.S. presidential election just seven months ago.  With domestic and international indices hitting new all-time or 52-week highs, there continues to be a pervasive sense of calm in stock markets around the globe.

While many investors may be ignoring the risks of a pullback, there are some select ETF issuers who are thinking of the bigger picture and delivering tools to ride out future storms. Three fund companies have released diversified equity strategies this year with built-in hedges or risk management measures to reduce downside volatility.  These risk-aware funds will provide active investors greater options to consider if capital preservation or minimizing volatility is a top priority.

Read the complete article at NASDAQ.com

The Low Down On Long-Short ETFs

Written by David Fabian, April 21st, 2017

EMAIL INBOX: Dave – read your article today.  What is your take on the long short ETF space at this point in the market?  Products like DYLS and DYB are looking more appealing in my opinion.  Interested to hear your take.

The long/short ETF category is one that many investors may not even know exists.  These strategies have typically been the realm of institutional portfolios and sophisticated hedge funds.  Now, they are readily available in the form of a diversified and liquid investment vehicle.  Read more

A Closer Look At Top Interest Rate Hedged ETFs

Written by David Fabian, November 22nd, 2016

Most investors purchase bond funds with a degree of interest rate sensitivity.  This is by design as they want to experience the off-setting effects of falling interest rates in exchange for capital appreciation of the underlying bond portfolio.  It’s a built-in risk mechanism that has been a successful diversification component when paired with stocks and other assets higher up the volatility scale.

Yet, after decades of falling rates, the long-term return expectations of many bond funds have fallen dramatically.  There is also growing concern that even a modest rise in Treasury yields will create a significant shift in the risk appetites of bond investors.  With so much anxiety surrounding the recent jump in interest rates, now may be a prudent time to explore the menu of bond ETFs with an embedded hedging component.

Read the complete article at NASDAQ.com

Goldman Sachs Debuts Hedge Fund ‘Best Ideas’ ETF

Written by David Fabian, November 08th, 2016

Hedge funds have come under fire in recent years as a streak of underperformance has led to allocation cutbacks in various pension and institutional portfolios.  Many investors are comparing hedge fund returns to passively managed vehicles like exchange-traded funds and coming away unimpressed with the results.

The crux of the issue is that active managers have had a difficult time selecting stocks or allocating to asset classes that justify their high expenses.  Returns in these vehicles are often streaky and industry correlations are becoming increasingly similar to that of an index fund.  Furthermore, the high liquidity, low costs, transparency, and tax efficiency of ETFs are strong influences in today’s modern investment landscape.

Read the complete article at NASDAQ.com