Questionable valuations in large-cap tech, namely those spending heavily on artificial intelligence (AI), is bringing volatility back to the markets. The CBOE Volatility Index (VIX) has risen close to 50% from the middle of August to the middle of November.
Investing in options-based ETFs can be a powerful way to pursue capital appreciation while aiming for reduced volatility and protection against market downturns. However, the unique nature of options may make active management particularly beneficial due to options having a finite lifespan and sensitivity to market movements.
In an investment landscape often characterized by unpredictable market swings, investors continually seek strategies that offer growth potential and help mitigate volatility. Fidelity Investments' hedged equity ETF emerges as a compelling solution.
Fidelity Hedged Equity ETF is one of the better structured, yet simpler ETFs that try to take the risk out of taking a risk. The fund combines a modified S&P 500 stock mix with "laddered" put options to offer upside with limited downside. This is along the lines of how I think about investing in general: take risk but define the worst-case outcome when possible. FHEQ does a nice job of that.