Strong first half for markets forces advisors to defend pessimistic outlooks

investmentnews.com:

With the first half of the year on the books, financial advisors who were able to catch the wave of growth and technology stocks are likely feeling good about what lies ahead, even if that is clouded somewhat by the reality of inflation and the risk of a recession.

The closely watched S&P 500 Index gained 17% over the first six months of the year, which stands in stark contrast to its 22% decline in 2022. But while the S&P got off to a strong start to the year, its performance pales in comparison to themeteoric growth of certain investment categories and strategies.

Consider, for example, the 349% first-half gain by GraniteShares 1.5x Long NVDA Daily ETF (NVDL), the 332% gain by MicroSectors FANG 3X Leveraged ETN (FNGU), or the 101% gain by ProShares UltraShort Bloomberg Natural Gas ETF (KOLD).

“Leveraged and growth and technology strategies have done the best this year, and bitcoin or anything related to blockchain also did really well,” said Todd Rosenbluth, director of research at VettaFi.

However, he added, the flow of assets suggests investors and financial advisors haven’t just been chasing the hottest performers.

The most popular ETF this year is the boring old Vanguard S&P 500 (VOO), which saw $18.5 billion worth of net inflows.

The next two biggest asset gatherers after VOO also suggests a focus on core allocations. The iShares 20+ Year Treasury Bond ETF (TLT), which is a safe haven play and recession hedge, took in $10.3 billion this year. Right behind TLT, with $9.7 billion worth of net flows in the first half, is iShares MSCI USA Quality Factor ETF (QUAL), which offers exposure to solid blue-chip stocks.

Marc McLean, owner of McLean Financial Planning & Investment Management, said the strength of the broad