Finance

Investor protection during market volatility through tactical fund

Published

2 months ago

April 19, 2025

Business Finance News

A different 'tack' for rough markets: How one ETF keeps moving to mitigate stock losses

Katie Stockton thinks she has a viable option for investors trying to withstand wild market swings.

She manages the Fairlead Tactical Sector ETF (TACK), which is designed to be nimble in times of market stress. It’s not tied to an index.

“What we try to do is help investors leverage the upside through sector rotation, but also minimize drawdowns,” the Fairlead Strategies founder told CNBC’s “ETF Edge” this week. “That’s obviously a big advantage longer term when you can just go into a less deep hole to climb out of.”

According to Stockton, her ETF is particularly nimble in this environment because it uses multiple strategies — not just one. Since President Donald Trump announced his “reciprocal” tariffs on April 2, the ETF has fallen just over 4%, while the S&P 500 has lost 6.9%.

Stockton’s ETF rotates monthly between all 11 S&P 500 sectors.

“We don’t own technology anymore,” Stockton said. “Some of the sectors that we like to invest in have fallen out of favor.”

As of April 16, the fund’s top sector holdings included consumer staples, utilities and real estate, according to Fairlead Strategies.

As of Thursday’s close, the Fairlead Tactical Sector ETF is down 4% so far this year.

Meanwhile, ETFs that are centered around specific sectors or strategies are largely under pressure. For example, the Invesco Top QQQ Trust (QBIG), which tracks the top 45% of companies in the Nasdaq-100 index, is down 22% in 2025.

The GraniteShares YieldBoost TSLA ETF (TSYY) is off 48% since the beginning of the year.

BTIG’s Troy Donohue, the firm’s head of Americas portfolio trading, thinks Stockton’s ETF employs a sound strategy – particularly during the recent “dramatic pullback.”

“TACK is a great example of how you can be nimble during these market times,” Donohue said. “It’s great to see it in an ETF product that has performed really well during this recent drawdown.”

Finance

Stocks making the biggest moves midday: WOOF, TSLA, CRCL, LULU

Published

1 day ago

June 6, 2025

Business Finance News

Finance

Swiss government proposes tough new capital rules in major blow to UBS

Published

1 day ago

June 6, 2025

Business Finance News

A sign in German that reads “part of the UBS group” in Basel on May 5, 2025.

Fabrice Coffrini | AFP | Getty Images

The Swiss government on Friday proposed strict new capital rules that would require banking giant UBS to hold an additional $26 billion in core capital, following its 2023 takeover of stricken rival Credit Suisse.

The measures would also mean that UBS will need to fully capitalize its foreign units and carry out fewer share buybacks.

“The rise in the going-concern requirement needs to be met with up to USD 26 billion of CET1 capital, to allow the AT1 bond holdings to be reduced by around USD 8 billion,” the government said in a Friday statement, referring to UBS’ holding of Additional Tier 1 (AT1) bonds.

The Swiss National Bank said it supported the measures from the government as they will “significantly strengthen” UBS’ resilience.

“As well as reducing the likelihood of a large systemically important bank such as UBS getting into financial distress, this measure also increases a bank’s room for manoeuvre to stabilise itself in a crisis through its own efforts. This makes it less likely that UBS has to be bailed out by the government in the event of a crisis,” SNB said in a Friday statement.

‘Too big to fail’

UBS has been battling the specter of tighter capital rules since acquiring the country’s second-largest bank at a cut-price following years of strategic errors, mismanagement and scandals at Credit Suisse.

The shock demise of the banking giant also brought Swiss financial regulator FINMA under fire for its perceived scarce supervision of the bank and the ultimate timing of its intervention.

Swiss regulators argue that UBS must have stronger capital requirements to safeguard the national economy and financial system, given the bank’s balance topped $1.7 trillion in 2023, roughly double the projected Swiss economic output of last year. UBS insists it is not “too big to fail” and that the additional capital requirements — set to drain its cash liquidity — will impact the bank’s competitiveness.

At the heart of the standoff are pressing concerns over UBS’ ability to buffer any prospective losses at its foreign units, where it has, until now, had the duty to back 60% of capital with capital at the parent bank.

Higher capital requirements can whittle down a bank’s balance sheet and credit supply by bolstering a lender’s funding costs and choking off their willingness to lend — as well as waning their appetite for risk. For shareholders, of note will be the potential impact on discretionary funds available for distribution, including dividends, share buybacks and bonus payments.

“While winding down Credit Suisse’s legacy businesses should free up capital and reduce costs for UBS, much of these gains could be absorbed by stricter regulatory demands,” Johann Scholtz, senior equity analyst at Morningstar, said in a note preceding the FINMA announcement.

“Such measures may place UBS’s capital requirements well above those faced by rivals in the United States, putting pressure on returns and reducing prospects for narrowing its long-term valuation gap. Even its long-standing premium rating relative to the European banking sector has recently evaporated.”