Invesco S&P 500 Downside Hedged ETF

PHDG

Market cap $75.4M

Investors should consider applying hedging techniques to their equity portfolio to reduce overall volatility.

CCOR, BALT, XRMI, PHDG and HEQT are included in this Analyst Blog.

Investors seeking to remain invested in the equity world with downside protection should invest in low-beta ETFs.

Invesco S&P 500® Downside Hedged ETF uses a quantitative, rules-based approach to track the S&P 500 Dynamic VEQTOR Index, offering exposure to equities and a hedge against volatility. The PHDG fund's strategy involves shifting allocations between equity, volatility, and cash, making it defensive and adaptable to market changes. PHDG stands out from other low-volatility ETFs due to its VIX futures positioning, providing a unique hedge during market turbulence.

Invesco S&P 500 Downside Hedged ETF aims to achieve positive total returns in both rising and falling markets through a three-sleeve approach. PHDG's performance has been disappointing compared to peers like PJUL and HEQT, which employ systematic collar strategies and consistently invest in the S&P 500. Retail investors seeking S&P 500 exposure with less volatility may be better served by funds like PJUL or HEQT rather than PHDG.

Investors may remain invested in the equity world with some downside protection by investing in low-beta ETFs.

Volatility has risen in recent weeks amid the tech sell-off and upcoming elections. Investors should apply some hedging techniques to their equity portfolio to reduce the overall volatility or protect against significant market downturns.

Market volatility has returned this year on fading bets over interest rate cuts, with the CBOE Volatility Index, also known as fear gauge, rising to a two-month high.