Learn how Global X's Equity Essentials ETFs leverage key indices to optimize risk and returns
In an article by Wealth Professional, produced in partnership with Global X, highlights the importance of major equity indices like the Nasdaq-100, the S&P 500, the MSCI EAFE Index, and the MSCI Emerging Markets Index.
These indices, recognized globally as benchmarks, are closely monitored as indicators of economic health and investment opportunities.
Global X Investments Canada Inc. (Global X), a Canadian ETF provider, considers these indices essential, integrating them into their ‘Equity Essentials’ suite of ETFs.
Global X offers Canadian investors a diversified approach to building their portfolios by considering equity exposure through geographic distinctions: Canada, the United States, and International.
The excerpt mentions that over $46bn, representing 12.9 percent of total ETF assets under management in Canada, is invested in 53 ETFs that track these benchmarks, with trillions of dollars of global investor capital allocated.
Global X’s Equity Essentials ETFs incorporate three strategies: low-cost benchmark tracking, 1.25 times leverage to potentially enhance returns, and covered call writing to boost income.
Alek Riley, vice president and portfolio manager of Product Strategy at Global X, states, “We know more than 60 percent of ETF assets are in passive ETFs. We built a continuum of strategies around these indexes tailored to investors’ cashflow needs and growth goals.”
The article further explains Global X’s “Enhanced” ETFs, which use leverage to generate approximately 1.25 times the return of their underlying indices.
According to Riley, “Investing with leverage is not without risk, but for growth-oriented investors with high conviction on the direction of these indices, there is the potential for long-term outperformance.”
Global X also offers covered call ETFs, an active management strategy designed to generate additional income.
Riley explains, “The Covered Call ETFs are intended to offer yield enhancement through an active covered call strategy. These are better suited to income-focused investors who are willing to give up some upside participation in exchange for a higher yield.”
Lastly, Global X provides ETFs that combine both enhanced leverage and covered call strategies, aiming to offer potentially amplified returns and higher monthly income.
Riley notes, “The Enhanced or Lightly-Levered Covered Call ETFs combine 25 percent leverage with exposure to the covered call strategy. These are the highest yielding across the essentials lineup.”
Global X is a significant player in Canada’s ETF market, with 125 ETFs and more than $34bn in assets under management as of July 31.
