Content and data provided by various third parties and Fidelity − Terms of Use | Help/Glossary

Print

| AAA

Inflation Bites Into Cash Investments. Instead, Opt for Equities

BY | ETF Database

10/14/2024 | 71 VIEWS

Related Symbols
GQI

For quite some time now, investors have used tools such as money market funds and CDs to put their sideline cash to work. Cash instruments can be used as a risk-averse means to gradually build up yield. However, by choosing to use these instruments, investors may miss out on bigger returns. Recently, the Natixis Investment Managers team put out an article breaking down why cash instruments may begin losing their luster. In the article, Natixis portfolio managers explain how inflation can tear into the returns from cash investments. “Investors who jumped out of the markets and went into money markets or CDs often aren’t aware of inflation’s corrosive effect on those returns,” noted Jack Janasiewicz, portfolio manager and lead portfolio strategist at Natixis. “Inflation is like a stealth predator. Although you can’t see or hear it coming, you will feel it when you see how it can diminish your yield.” The Natixis article breaks this point down with a good example. For investors who get 5% in returns from a cash investment, the inflation rate will trim those earnings down to closer to 2%- 3%. Meanwhile, equity investment has allowed the market to roundly outdo climbing inflation for some time now. As such, investors may wish to move their sideline cash to an income-generating equity strategy. Income-Building Equity StrategyOne fund that might be able to do the trick is the Natixis Gateway Quality Income ETF (GQI A). The fund mixes a low-volatility equity portfolio with an options overlay to provide consistent income. As such, investors can use the equity portion of the strategy to gradually build up capital appreciation. Meanwhile, the fund offers near-term income through writing call options. For its investors, GQI’s results indicate good prospects for long-term growth potential. As of Oct. 9, 2024, the fund’s NAV has risen 12.52% year to date. For more news, information, and analysis, visit the Portfolio Construction Channel.

Performance data shown is past performance and is no guarantee of future results. Current performance may be higher or lower than the performance data quoted. Yield and return will vary, therefore you have a gain or loss when you sell your shares. For standard quarterly performance, go to the fund's Snapshot page by clicking on the ETF/ETP's symbol.

ETFs may trade at a premium or discount to their NAV and are subject to the market fluctuations of their underlying investments.

For iShares ETFs, Fidelity receives compensation from the ETF sponsor and/or its affiliates in connection with an exclusive long-term marketing program that includes promotion of iShares ETFs and inclusion of iShares funds in certain FBS platforms and investment programs. Please note, this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral. Additional information about the sources, amounts, and terms of compensation can be found in the ETF's prospectus and related documents. Fidelity may add or waive commissions on ETFs without prior notice. BlackRock and iShares are registered trademarks of BlackRock, Inc. and its affiliates.

FBS receives compensation from the fund's advisor or its affiliates in connection with a marketing program that includes the promotion of this security and other ETFs to customers ("Marketing Program"). The Marketing Program creates incentives for FBS to encourage the purchase of certain ETFs. Additional information about the sources, amounts, and terms of compensation is in the ETF's prospectus and related documents. Please note that this security will not be marginable for 30 days from the settlement date, at which time it will automatically become eligible for margin collateral.

News, commentary (including "Related Symbols") and events are from third-party sources unaffiliated with Fidelity. Fidelity does not endorse or adopt their content. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use.

Any data, charts and other information provided on this page are intended to help self-directed investors evaluate exchange traded products (ETPs), including, but limited to exchange traded funds (ETFs) and exchange traded notes (ETNs). Criteria and inputs entered, including the choice to make ETP comparisons, are at the sole discretion of the user and are solely for the convenience of the user. Analyst opinions, ratings and reports are provided by third-parties unaffiliated with Fidelity. All information supplied or obtained from this page is for informational purposes only and should not be considered investment advice or guidance, an offer of or a solicitation of an offer to buy or sell a particular security, or a recommendation or endorsement by Fidelity of any security or investment strategy. Fidelity does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating ETPs. Fidelity makes no guarantees that information supplied is accurate, complete, or timely, and does not provide any warranties regarding results obtained from their use. Determine which securities are right for you based on your investment objectives, risk tolerance, financial situation and other individual factors and re-evaluate them on a periodic basis.

Before investing in any exchange traded product, you should consider its investment objective, risks, charges and expenses. Contact Fidelity for a prospectus, offering circular or, if available, a summary prospectus containing this information. Read it carefully.