13 Secret Ways To Invest For The Fed Rate Hike

Audio Length: 00:19:31

Welcome to Episode #10 of the Zacks Market Edge Podcast.

Every week, host and Zacks stock strategist, Tracey Ryniec, will be joined by guests to discuss the hottest investing topics in stocks, bonds and ETFs and how it impacts your life.

In this episode, Tracey is joined by Eric Dutram, Zacks ETF Strategist and editor of Zacks ETF Investor newsletter. He’s an expert on all the different ETF products, especially the more obscure ETFs that most investors have never heard about.

The Federal Reserve will be raising rates. How can you cash in on the change in Fed policy?

Many investors are already invested in the obvious areas that should benefit from Fed rate hikes like the regional banks. Tracey and Eric give their take on the regional bank ETFs, including one of the more popular choices, and Tracey’s favorite, the iShares US Regional Banks (IAT – ETF report).

But a secret way to invest in the financials is through the iShares Broker-Dealers ETF (IAI – ETF report) which holds companies like Goldman Sachs and Charles Schwab but also the NASDAQ and CME Group. Why would I want to own the broker dealers? Eric explains why they could cash in as the Fed raises.

If you think the dollar will continue to strengthen if the Fed raises, then the currency hedging ETFs are for you. Eric really likes the WisdomTree Europe Hedged Equity ETF (HEDJ – ETF report) even though it’s no longer a secret. Tracey and Eric also discuss other currency hedging possibilities, including the Japanese Currency ETF and Tracey’s dream of hedging the Mexican or Colombian peso.

Thinking about bonds? The secret way investors can play the rise in bond yields is by taking a look at the WisdomTree Barclays US Aggregate Bond Negative Duration ETF (AGND – ETF report). It’s not yet a popular fund, because so many have been betting on the bond bull for decades, but Eric thinks that could change as rates move higher.