Paired ETFs Strategy Can Smooth Volatility

Given the recent stress test in the market, I thought it might be worthwhile to revisit an ETF strategy I explored last month: pairing a sector ETF with an inverse sector ETF so that the long holding went up a little more than the inverse ETF went down as the market moved higher over time.

The idea was to reap price appreciation of a few percent and some yield from both holdings. The goal was to try to capture most of the market's return with only a small fraction of the risk.

It seems to have delivered the desired results. Even better, it can work for several sectors, and may find more applications as ETF offerings expand. ...