The Federal Reserve's pivot on tightening U.S. monetary policy this year an...
NEW YORK - The Federal Reserve’s pivot on tightening U.S. monetary policy this year and a change in a bond market gauge that is often viewed as a harbinger of a recession pose a dilemma for investors: how to stay in stocks without running the risk of losing one’s shirt when risk assets stumble.
The $8.27 billion Gateway Fund - the oldest and largest fund in Morningstar’s options-based category - has a three-decade history of running low-volatility equity index options strategies. For instance, an investment of $10,000 in the Gateway fund 10 years ago would now be worth about $17,500, according to Refinitiv data. By comparison, the same amount invested in the S&P 500 Index’s tracking fund, the SPDR S&P 500 ETF Trust, would have returned more than $44,000, albeit with a higher degree of volatility.
Even though most of those losses have been recouped, jitters remain, with some worrying that the Fed’s dovish tilt is an implicit confirmation of the markets’ anxiety about growth.
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