Wall Street wants to privatize more of your money in market correction

Wall Street investment strategies that were once reserved for private banking clients are now being offered to Main Street investors by major players in the ETF space such as JPMorgan Chase and BlackRock. These firms are making bets that private strategies will continue to see greater adoption, including private credit as a mainstream bond portfolio holding and equity income strategies that involve more complicated trading than traditional dividend equity funds.

According to Ben Slavin, managing director and global head of BNY Mellon ETF business, there is a growing demand from ETF investors for access to alternative investment funds. Managers are looking to tap into this wealth space to meet investors where they are. BlackRock, the world’s largest asset manager, acquired a provider of alternative investments research last year and plans to index more private investments.

The SEC recently approved the first private credit ETF, marking a milestone in the industry. Lack of liquidity in private markets has been a key issue for ETFs, but innovations in the industry are making it easier for investors to access these traditionally illiquid funds.

Another trend in the ETF market is the rise of active ETFs designed to offer downside protection while capitalizing on income gained from selling call options. Funds like the JPMorgan Equity Premium Income ETF and JPMorgan Nasdaq Equity Premium Income ETF use this approach to provide investors with consistent income.

Buffer ETFs, which cap both market upside and downside to mitigate volatility in returns, are also gaining popularity. These products offer investors a way to stay in the market without fear of losing money quickly, especially in a market that has seen steep declines recently.

While these strategies are not new and have been used on Wall Street for decades, ETFs make it easier and cheaper for investors to implement them. Private credit ETFs, for example, offer structural advantages as an inexpensive way to access previously expensive and illiquid investments.

Overall, the ETF market is evolving to meet the changing needs of investors, offering a range of strategies to navigate market volatility and generate income. As ETFs continue to innovate and expand, investors will have more options to diversify their portfolios and achieve their financial goals.