Tom Lydon Talks Discovering Yield, Commodities & Tech

ETF Trends CEO Tom Lydon had plenty to share on where to find yield with TD Ameritrade’s Nicole Petallides.

Lydon noted how the “40” from the 60/40 being dormant, as trying to get yield today is actually quite difficult. The fact that there’s a record $5 trillion in money market funds shows how investors have brought their cash off the table and are watching from the sidelines, or looking into alternative strategies.

“Looking at areas such as real estate, a fund such as the iShares US Real Estate ETF (IYR), for example, you can get a 2% yield and also make some appreciation, as we’re seeing real estate move to the upside,” Lydon explains.

With real estate in mind, with respect to housing prices, Lydon stated how price increases may slow down a bit, but the general trend is probably on the upside going into the next decade. To believe that would also mean it is worth diversifying in that portion of the portfolio.

Additionally, in some creative areas, Nationwide has an options overlay strategy in the Nasdaq-100 where an investor can participate on the upside of innovative tech stocks while minimizing risk.

The Inflation Factor

Looking to the possibility of inflation, Lydon noted how it hasn’t been a genuine concern in some time. In other words, there exists a whole generation that needs to be educated on inflation and how to safely invest in an inflationary environment. The biggest commodity ETF, the Invesco Optimal Yield Diversified Commodity ETF (PDBC), has a basket of commodities dealing in areas such as metals and agriculture. These are areas that have gone through the roof in pricing.

“If you don’t have commodity-based investments in your portfolio,” Lydon states, “That might be something to consider for sure. The crazy thing in all of this is how gold has been relatively flat. It’s been the worst-performing of all commodities out there, even with many people looking to gold as the benchmark. That’s something to consider too.”

Turning toward the ARK, which took off in popularity in 2020, Lydon pointed to the attention regarding Cathie Wood, who has been leading others in supporting an assortment of disruptive tech areas like Tesla. The current pullback may be a good buying opportunity based on the holdings to be found. Roku, Square, Teledoc, and others are all areas getting support, even as people are closer to pulling out of the pandemic.

“The average small business in America is now able to run their processing and payments through areas like Square, or able to set up online buying through Shopify. What a great opportunity this has been if you’ve embraced technology during Covid.”

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