As fears of recession and bank failures fuel investor anxiety, one strategist says the best prospect for outperformance this year is staying long-term invested with a steadfast asset allocation plan.Â
“Overall, the industry flows into ETFs are still positive,” D.J. Tierney, director and senior investment portfolio strategist at Schwab Asset Management, told Bob Pisani on CNBC’s “ETF Edge” on Monday. “We still are seeing by and large net inflows in investing through our vehicles.”
Investors have become increasingly interested in fixed income ETFs this year, Tierney said, as higher interest rates present an opportunity to benefit from a bond market rally should the Federal Reserve cut rates in the future.
Tierney explained that of the 29 Schwab ETFs, 22 of them are seeing new inflows. The Schwab fund with the largest flows so far this year is the Schwab Short-Term US Treasury ETF (SCHO) with more than $3 billion in inflows, he said. And the US Dividend Equity ETF (SCHD) has garnered over $2.5 billion in inflows this year.
“Nobody can predict the market timing and the market upswings,” he said. “Staying long term invested with a good asset allocation plan generally gives the best prospects for long term outperformance.
Nate Geraci, president of The ETF Store, echoed Tierney’s sentiment on avoiding getting caught up in near-term market turmoil.
“Just think back over the past three or four years,” Geraci said in the same segment Monday. “We had a once-in-a-generation pandemic, we then had a meme stock and crypto bubble.”
Geraci also cited the Russian invasion of Ukraine last year and the banking crisis this year as more recent examples of volatility-inducing events which provoke shortsighted concerns.
“There’s always going to be something that comes along,” he said. “Longer term, we know in the ETF space, the trend is up. And it’s up at a fairly significant trajectory.”
