Matt Kaufman, head of ETFs at Calamos Investments, believes that there may be an untapped market for exchange-traded funds (ETFs) in the trillions of dollars currently sitting in CD and money market accounts. This market is larger than the current ETF space and could provide a significant opportunity for growth. Kaufman is particularly interested in structured and options ETFs designed for risk management and income, especially in a higher-rate environment where interest rates are expected to stay higher for longer. He believes that these types of ETFs can provide stability and capital protection over an extended period of time, offering opportunities for individuals seeking to outpace inflation, particularly retirees.
Kaufman notes that historically, it has been challenging to achieve risk management and income from bonds when interest rates were at record lows. However, with rates now moving higher, there is greater potential to deliver capital protection over a longer period. This makes structured and options ETFs particularly attractive as they can provide a level of security while still allowing for exposure to market returns. In a higher-rate environment, these types of ETFs can offer investors the opportunity to earn more than the risk-free rate, with their money linked to the market but with limited downside risk. Additionally, these products can provide tax-deferred growth, making them even more appealing for investors.
Calamos Investments has recently launched a suite of 12 structured protection ETFs, following Kaufman’s belief in the potential for growth in this market. These ETFs are designed to provide investors with a range of options for managing risk and generating income in a higher-rate environment. By offering capital protection over an extended period of time, these ETFs aim to meet the needs of individuals seeking to outpace inflation while still preserving their wealth. Kaufman sees structured and options ETFs as a valuable tool for investors, particularly retirees, who are looking for stability and income in a changing interest rate environment.
In Kaufman’s view, the current market environment presents a unique opportunity for ETFs to attract investors who may have previously been sitting on the sidelines with their money in CD and money market accounts. With interest rates expected to remain higher for an extended period, there is a growing need for investment products that can provide both stability and income. Structured and options ETFs can offer investors the ability to earn more than the risk-free rate while still protecting their capital over time. By tapping into this untapped market, ETFs have the potential to become a key investment option for individuals looking to grow their wealth and outpace inflation in a changing economic landscape.
Overall, Kaufman’s belief in the potential for growth in the structured and options ETF market is based on the idea that these products can provide investors with a level of security and stability that may not be available in traditional bonds or money market accounts. With interest rates at higher levels, there is an opportunity for ETFs to deliver capital protection and income over an extended period of time. By offering a range of products designed for risk management and income generation, ETFs can attract a new wave of investors who are looking for opportunities to grow their wealth and outpace inflation in a market environment where interest rates are expected to stay higher for longer. This shift towards structured and options ETFs could mark a significant evolution in the way investors approach risk management and income generation in the future.
