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More retirees opting for ‘good enough’ stock strategy to protect money

Published

10 months ago

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Buffered ETFs is just the first wave, says TrueShares ETFs CEO

Retirees and investors near retirement are in a tough spot. They need growth from their stock market portfolio to fight inflation and rising health care costs, but another major market drop could leave stocks in a “lost period” which they don’t have the time to wait out.

As a general rule in the current investment era, many financial firms tell recent retirees to keep more than half of their portfolio in stocks and then dial it down as they get older. Once upon a time, a 65 year-old with 50% in stocks would have been seen as aggressive. But with a record concentration of the U.S. stock market in a handful of big tech stocks — roughly a third of the S&P 500 — concerns about an AI bubble and major market correction are warranted.

According to research from Harvard economist Jason Furman, a former Obama White House advisor, chip sales represented roughly 92% of GDP growth in the first half of the year, and without chip sales, the U.S. economy would have grown 0.1%. Federal Reserve chairman Jerome Powell said on Wednesday at the latest FOMC meeting that AI is a major source of growth for the U.S. economy, unlike the dotcom bubble. While that could be a good thing long-term, it could also ratchet up the risk in the short-term for investors if the return on investment from AI doesn’t materialize quickly.

The U.S. stock market’s recent success leave retirement investors sitting on big portfolio gains, but looking for ways to trim stock exposure and to stay invested without taking on too much equity risk. More retirees are placing their money in equity income-generating ETFs to create what fund managers in the space argue will be a smoother path forward.

Buffered ETFs, also called defined outcome ETFs, use options to protect against a set level of losses while still capturing a portion of the upside. They have grown exponentially since the pandemic as an additional way for investors who have always used bonds and short-term treasuries to buffer downturns in the stock market and generate income.

“It’s gone meteoric,” said Mike Loukas, TrueShares ETFs CEO, on CNBC’s “ETF Edge.”

According to a Morningstar report from April, the buffered ETF category has returned about 11% per year over five years. Assets in the category have ballooned to more than $30 billion, with billions in new inflows each year.

“A great deal of wealth is moving from the accumulation phase to the distribution phase. Now a lot of those investors still need growth, but they need growth with risk protection and the defined outcome space,” Loukas said.

That also means there is a big shift in investor mindset, with less investors focused on keeping up with or beating the S&P 500. Now, according to Loukas, retirees are aiming for what he called “performance that’s good enough” — steady, predictable returns that match their comfort level.

But there is another tradeoff in addition to the lagging in strong bull markets as a result of their structure: higher costs. Buffered ETFs usually charge around 0.75% to 0.85% in annual fees, compared with 0.03% for a plain equity index ETF like Vanguard’s VOO or the SPDR S&P 500 SPY. But for retirees focused on capital preservation, diversification, and peace of mind, the extra cost may be worth it.

“These are essentially math-based products,” Loukas said. “They typically will deliver on what they’re supposed to deliver on.”

Biggest buffered equity ETFs

  • FT Vest Laddered Buffer ETF (BUFR): $7.9 billion in assets/0.95% net expense ratio
  • Innovator Defined Wealth Shield ETF (BALT): $1.9 billion in assets/0.69% net expense ratio
  • FT Vest Laddered Deep Buffer ETF (BUFD): $1.5 billion in assets/0.95% net expense ratio
  • Innovator Equity Managed Floor ETF (SFLR): $1.2 billion/0.89% net expense ratio

Source: ETFAction.com

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Private Credit Expansion and Regulatory Oversight in 2026 Capital Markets

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5 days ago

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August 9, 2026

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The global private credit market has solidified its role as a fundamental pillar of enterprise finance, expanding rapidly across middle-market lending, asset-backed finance, and infrastructure financing. As non-bank financial institutions capture a larger share of corporate debt origination, global regulatory bodies are increasing oversight to evaluate market transparency and systemic risk interconnections.

Growth Drivers in Direct Lending
Direct lending platforms have continued to attract substantial institutional allocations from pension funds, sovereign wealth entities, and insurance companies seeking attractive risk-adjusted yields. Private debt funds offer corporate borrowers customized financing structures, faster execution timelines, and confidentiality compared to syndicated loan markets.

In 2026, private credit managers are increasingly financing larger corporate transactions, providing multi-billion-dollar credit facilities for buyout deals and corporate restructurings. The flexibility of private debt contracts—featuring unitranche pricing and tailored covenant packages—has made direct lending the preferred capital source for middle-market enterprise sponsors.

Regulatory Scrutiny and Systemic Risk Assessment
The rapid growth of non-bank intermediation has drawn heightened scrutiny from financial regulators in North America and Europe. Because private debt agreements are negotiated privately without public exchange disclosures, central banks are evaluating potential vulnerabilities related to asset valuation consistency and fund liquidity profiles.

Regulatory agencies are introducing guidelines aimed at improving reporting standards for private investment vehicles managing institutional assets. Key focus areas include monitoring leverage ratios within private credit funds and evaluating indirect credit exposures between commercial banking institutions and private debt funds.

Navigating Elevated Refinancing Costs
With benchmark interest rates remaining elevated, private debt borrowers face higher debt service obligations on floating-rate credit facilities. Financial advisory firms report an increase in proactive liability management strategies, including payment-in-kind (PIK) interest options, equity infusions from sponsors, and covenant modifications.

Private credit managers with deep operational capabilities are actively working alongside portfolio companies to optimize working capital and maintain cash flow coverage ratios during periods of higher borrowing costs.

Key Financial Takeaways
1. Mainstream Asset Class: Private credit has expanded beyond niche alternative asset status into a core corporate finance solution.
2. Enhanced Transparency Standards: Regulatory frameworks are evolving toward greater disclosure requirements for private debt managers.
3. Proactive Risk Management: Lenders and sponsors must prioritize debt sustainability and active portfolio monitoring amid high benchmark rates.

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Venture Capital and Startup Valuations in 2026: Focus on Unit Economics and Sustainable Growth

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1 week ago

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August 5, 2026

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The global venture capital (VC) ecosystem is operating under a disciplined investment framework in 2026. Following years of valuation adjustments and shifting liquidity environments, venture capital firms and private equity investors are prioritizing proven unit economics, positive cash flow pathways, and capital efficiency over rapid, unconstrained user acquisition.

The Shift Toward Disciplined Startup Valuations
Early-stage and growth-stage startup valuations have stabilized at sustainable historical averages. Venture capital partners are conducting rigorous due diligence processes before deploying capital, scrutinizing gross margins, customer acquisition costs (CAC), net revenue retention (NRR), and lifetime value (LTV) metrics.

While total capital deployed remains robust, seed and Series A funding rounds are taking longer to finalize. Founders are expected to demonstrate clear product-market fit and defensible intellectual property rather than relying on top-line revenue projections unsupported by strong underlying economics.

M&A Activity and Liquidity Solutions
The market for venture-backed exits is seeing renewed momentum through strategic mergers and acquisitions (M&A) and secondary market liquidity facilities. Established corporate enterprises are acquiring high-performing technology startups to integrate proprietary artificial intelligence models and specialized software solutions into their product ecosystems.

Simultaneously, secondary market transactions have become an essential liquidity mechanism for early employees and institutional investors. Specialized secondary funds are purchasing pre-IPO shares at discounted valuations, providing liquidity opportunities while companies remain private for longer durations.

Sector Allocation: Deep Tech, Clean Energy, and Enterprise Automation
Venture capital investment is heavily concentrated in deep technology and capital-intensive engineering sectors. High-growth investment themes include:
– Next-Generation Semiconductors: Hardware startups designing specialized AI processors and energy-efficient microchip architectures.
– Clean Technology: Battery chemistry innovations, carbon capture solutions, and grid-scale energy storage startups.
– Enterprise Process Automation: Software platforms that automate complex workflows in healthcare, financial services, and industrial logistics.

Key Insights for Entrepreneurs and Investors
1. Prioritize Capital Efficiency: Startups focused on achieving operational profitability receive higher valuation premiums from institutional investors.
2. Strategic Exit Planning: Corporate M&A is serving as a primary exit route for venture-backed startups navigating prolonged IPO windows.
3. Focus on High-Moat Technologies: Deep tech and proprietary software architectures are securing the majority of growth-stage capital allocations.

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The Evolution of Digital Payments: Cross-Border Settlement and Central Bank Digital Currencies in 2026

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1 week ago

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August 5, 2026

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The infrastructure supporting global commerce is undergoing a major technological upgrade as real-time digital payment rails, cross-border settlement solutions, and Central Bank Digital Currency (CBDC) pilot programs achieve widespread commercial adoption. Financial institutions and fintech developers are reimagining payment processing to eliminate friction, lower transaction fees, and accelerate settlement speed.

Transforming Cross-Border Settlement Infrastructure
For decades, international corporate payments relied on legacy correspondent banking networks characterized by multi-day settlement delays, opaque fee structures, and high foreign exchange markups. In 2026, modern cross-border payment networks are enabling near-instantaneous settlement for international trade transactions.

Financial technology platforms are leveraging distributed ledger technology and real-time gross settlement (RTGS) interconnections to settle transactions in seconds. International trade participants benefit from reduced working capital requirements and minimized foreign exchange volatility risks during cross-border transfers.

Commercial Expansion of Central Bank Digital Currencies
Central banks representing major global economies are advancing CBDC initiatives from research phases into active commercial deployment. Wholesale CBDCs—designed specifically for interbank settlement and financial institution clearing—are demonstrating substantial efficiency gains in domestic and international transactions.

At the retail level, several nations have introduced public digital currency options alongside existing commercial banking networks. These sovereign digital payment channels aim to expand financial inclusion, lower consumer transaction fees, and improve the efficiency of government-to-citizen financial disbursements.

Open Banking and Embedded Finance Ecosystems
Alongside settlement infrastructure upgrades, open banking regulations and embedded finance frameworks are transforming merchant-consumer interactions. Commercial businesses across retail, travel, and business-to-business (B2B) services are integrating seamless payment APIs directly into their customer software interfaces.

Through open banking frameworks, consumers can initiate secure bank-to-bank payments without relying on traditional credit card networks, significantly reducing merchant processing fees. Integrated Buy-Now-Pay-Later (BNPL) options and point-of-sale credit facilities continue to expand, driving higher conversion rates for digital commerce platforms.

Strategic Financial Takeaways
1. Treasury Optimization: Corporate treasurers should leverage instant cross-border payment platforms to minimize liquidity buffers and foreign exchange exposure.
2. CBDC Integration: Financial institutions must prepare internal core banking systems to interface with emerging wholesale CBDC payment rails.
3. Merchant Fee Reduction: Enterprise merchants can lower payment processing overhead by adopting account-to-account (A2A) open banking checkout solutions.

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