This week, China’s startup DeepSeek has made waves in the tech industry by showcasing its new AI models, including R1, which boasts capabilities similar to ChatGPT. Notably, R1 was built with a budget of less than $6 million, significantly cheaper than other Silicon Valley AI models that often require billions of dollars.
The revelation has sparked debate about the valuation of tech stocks and has led to steep losses for chipmakers like Nvidia, which plummeted 17% on Monday. Despite the chaos, investors should take away one crucial lesson: Nvidia is not a foolproof stock.
Many investors have bet big on Nvidia’s dominance in the chipmaking market, but this recent sell-off may have shaken their confidence. To mitigate potential losses and stay engaged in the market, investors can consider hedged equity ETFs like Parametric Hedged Equity ETF (PHEQ).
This large-cap strategy offers a portfolio of leading US tech names, including Nvidia, Apple, and more. PHEQ uses an option overlay strategy to hedge its returns against market turmoil, making it an attractive tool for traders looking to participate in equity rallies while managing volatility.
In the near term, PHEQ has offered competitive results, with a 4.81% gain over the last three months, surpassing the S&P 500 Index’s 4.78% rise during the same period.
Source: https://www.etftrends.com/etf-yield-channel/tech-sell-off-highlights-use-case-hedged-equity-etfs