Market Shift: Investors Seek Safety Amid Uncertainty
As the Trump-era market surge begins to lose steam, investors are rethinking their strategies and seeking safer havens. Many top-performing ETFs this year, such as YieldMax Gold Miners Option Income Strategy (GDXY), Eventide High Dividend ETF (ELCV), and VictoryShares Free Cash Flow ETF (VFLO), are attracting attention from investors looking to reduce risk.
Gold’s Allure in Uncertain Times
In a world where inflation worries abound, gold has become a sought-after asset, offering a sense of security and stability. The YieldMax Gold Miners Option Income ETF, with its unique portfolio, has returned over 4.8% this year, according to Morningstar Direct. By selling call options on the VanEck Gold Miners ETF (GDX), the fund generates yield without sacrificing upside gains from gold miner stocks.
Dividend ETFs Gain Traction
Dividend-paying stocks are also gaining popularity, as investors seek predictable income streams. The Eventide High Dividend fund, with assets of $72.7 million, has returned over 4% this year, driven by high-yield energy and utility stocks. Its largest holding, Williams (WMB), yields 3.3% and has a solid stock performance this year.
First Trust Rising Dividend Achievers ETF: A Different Approach
The First Trust Rising Dividend Achievers ETF (RDVY) takes a distinct approach, focusing on stocks likely to increase their dividend payouts. With a 1.51% yield, the fund may not be the highest-yielding, but its energy-heavy portfolio and holdings like EOG Resources (EOG) make it an attractive option for income seekers.
Cash Flow Kings
Investors are also drawn to companies with durable cash-generating power, which can provide a buffer against inflation. The VictoryShares Free Cash Flow ETF, with assets of $1.9 billion, blends high-quality technology stocks like Qualcomm (QCOM) with energy plays like Chevron (CVX). Qualcomm’s earnings are expected to rise every year from 2023 to 2026, making it an attractive holding.
Inflation Fears Drive Demand for High-Income Stocks
As inflation concerns persist, investors will likely continue to prioritize high-income stocks. With the 10-year Treasury yield pushing 5%, dividend-paying companies are looking increasingly attractive. “Bonds have declined in price, making dividend-paying companies look relatively appealing for income purposes,” said Todd Rosenbluth, head of research at TMX Vetta Fi.
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