This fund offers equity investments in current markets
Markets continue to bleed as investors digest news of continued high inflation, with consumption and the core for April coming in above expectations. More recent reports indicate that wholesale inflation rose 0.5% in April, an 11% year-on-year increase and an indicator that inflationary pressures are continuing, according to CNBC.
The news follows last week’s Fed meeting which will see the most aggressive tightening cycle many advisers and investors have ever seen, with at least two more 0.50% hikes on the near horizon and balance sheet reductions that will begin next month.
The latest quarter ended with the S&P 500 in the red for the first time since 2020 and the fourth time the major stock index has ended a quarter in negative in the past 25 reporting cycles since September 2015. The declines were driven by inflation fears, rising interest rate fears, and the exacerbated pressures that Russia’s invasion and protracted war in Ukraine has placed on an already strained global economy.
“It was only due to a strong rally at the end of March that the quarter went from awful to bad,” writes KFA Funds in a recent post. “Still, March’s gains felt like a joyless bear market rally.”
In an environment where fixed income is under threat and cash is increasingly at risk from inflation, equities can often become the least scary options for advisors and investors, a somewhat familiar in times unknown. One of the places advisors turn to seek income is within dividend and dividend companies.
the KFA Value Line Dynamic Core Equity Index ETFs (KVLE) follows a strategy of investing in high-yielding companies while diversifying in a way that a “thematic” portfolio does not. The fund is a core equity portfolio of securities that are skewed to favor dividend yield, and it seeks to increase yield while avoiding investing only in high yielding sectors and stocks.
“We believe that KVLE is well positioned for a turbulent 2022 in the markets. Stable companies with strong balance sheets and paying healthy dividends should do well against the overall S&P 500 GOLD market in most difficult times. This is even more true in an environment characterized by reluctant equity investors, who are increasing allocations to US equities for lack of alternatives and naturally favoring less risky stocks,” KFA Fund written.
The fund uses a smart beta strategy to seek more profitable alpha as well as a risk management strategy that seeks to limit the effects of significant market declines while being positioned to capture positive returns.
KVLE has an expense ratio of 0.55%.
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