Two hedged ETFs that retirees can use for relative safety in a bear market

"In 2022, the classic 60/40 balanced portfolio of stocks and bonds didn't provide much protection. In fact, it lost nearly as much as a 100% equity portfolio."

"To mitigate risks, investors can increase cash allocations or explore alternative ETFs that hedge downside risk using options. These strategies can help smooth returns in a bear market."

"The Simplify Hedged Equity ETF holds exposure to the S&P 500 through an underlying iShares ETF, adding a put spread collar for downside protection."

"HEQT ladders these collars across three different monthly expirations, reducing timing risk and avoiding having all the hedges reset at once."

In 2022, the traditional 60/40 portfolio of stocks and bonds failed to protect investors, losing nearly as much as a 100% equity portfolio. Rising inflation led the Federal Reserve to increase interest rates, causing stocks and bonds to become positively correlated and decline simultaneously. To mitigate risks, investors can increase cash allocations or explore alternative ETFs that hedge downside risk. The Simplify Hedged Equity ETF offers a strategy involving a put spread collar for partial downside protection, though it comes with higher costs and capped upside potential.

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