Attractive puts to hedge growth risks: Goldman Sachs
In the current economic environment, characterized by recent equity market weakness and disappointing July employment figures, investors are increasingly concerned about potential growth slowdowns. However, analysts at Goldman Sachs have identified attractive put options as a prudent hedge against these growth risks.
However, they anticipate that markets will be particularly sensitive to incoming economic data, making hedging against growth risks a strategic necessity. In the ETF space, Financials, Consumer Discretionary, and Materials ETFs are flagged as effective hedges. These ETFs have shown high beta and correlation to U.S. growth while maintaining lower options prices.
For tech stocks, which are currently trading at stretched valuations despite recent underperformance, analysts recommend tactical hedges through put options.
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