Investing with the fear factor

In the current investment landscape, fear driven by trade wars and market volatility often leads to higher implied volatility, as measured by the VIX or "fear gauge." While these fears typically result in overestimated risks, they can also present unique opportunities for investors. The 2018 tariffs offer a case study where slowed growth rather than inflation prompted potential Federal Reserve intervention that could lead to improved economic conditions.

This scenario may foster increased domestic capital investment and consumer spending, creating a robust environment for stocks and credit markets. For those looking to capitalize on such dynamics, options like the Invesco Rochester High Yield Municipal ETF (IROC) provide enticing income prospects in municipal bonds, while the Invesco AAA CLO Floating Rate Note ETF (ICLO) offers appealing yields with minimal duration risk.