Military helicopter
Photo by Don Jackson-Wyatt on Unsplash

Advisors looking to put their clients at ease by comparing this market to previous periods of volatility will have to reach back further than the two decades Rene Reyna has spent in the business. The head of thematic and specialty ETF strategy at Invesco in Downers Grove, Ill. said he’s never seen anything like this.

“Nothing comes to mind with this amount of uncertainty,” he said in an interview at Future Proof Citywide in Miami on Tuesday. Part of what makes the current environment so difficult to get a read on is that the volatility has been triggered — at least, in part — by a U.S. president whose plan is unclear and execution haphazard.

“It’s hard to see what the endgame is,” Reyna said. “This doesn’t make any sense.”

His media handler is anxious about us talking politics, which at present makes about as much sense as telling a weather forecaster not to talk about wind. Donald Trump is not 2025’s sole market mover. But he’s a category-something.

Reyna and I have grabbed a beachside table to talk about four markets that he and his team are invested in, with a mix of equity picks and options trades: artificial intelligence (AI), U.S. defence companies, large American banks and Chinese technology.

“Stock selection matters more in an environment like today’s,” he said. “Investors are looking beyond the Magnificent Seven.”

Artificial intelligence

The shock introduction of DeepSeek in Hangzhou, China, this winter appeared to call into question the valuation of Nvidia and other sector leaders. Not so, according to Reyna. “The commitment still remains,” he said. “The outlook is still very positive. It’s hard to say they are overvalued.”

Giants like Amazon keep innovating and growing, both organically and via acquisition. “It does seem like the larger [companies] are going to just continue to get larger,” Reyna said.

AI remains in an early stage commercially. The optimism business leaders have about it and the demand for its efficiencies across multiple industries around the world make a case for continued exposure, he said.

U.S. defence

Trump’s so-called Department of Government Efficiency presents investors in U.S. defence companies with a question they haven’t faced before —  could spending growth slow or perhaps even turn negative? The latter is unlikely, but the black-box nature of the Elon Musk-led project is such that nothing can be taken for granted.

On balance, however, Reyna said U.S. firms in this sector will continue to perform well. Trump’s tough talk on military spending by NATO-member countries is having the desired effect. Policymakers there are also worried the U.S. will step away from its leadership position in the historic alliance, which could have severe implications for continental defence.

“Europe feels like maybe they need to go at this on their own,” Reyna said. “We think U.S. defence companies are going to benefit from that. We’re still a leader in defence technology.”

As hard a pill as it may be for Europeans to swallow if they do spend more on defence, it will benefit U.S. manufacturers.

Big U.S. banks

Large U.S. banks have battled a pair of headwinds in recent years — a tougher regulatory environment and higher interest rates, Reyna said. Both have reversed course.

“We’re seeing a pretty big recovery there,” he said.

“If you look at 2024, we saw a big uptick in trading volume and revenue,” Reyna said. “It’s about deregulation, lower taxes and hopefully the rate environment improves.”

Chinese tech

Beijing’s promise to put its weight behind a 5% economic growth rate this year has led to renewed support for business activity across the country.

“We know that President Xi controls when entrepreneurism in the country is going to be celebrated versus not,” Reyna said. “It seems like we’re back on. And we know, based on recent meetings, that they want to focus on their technology capabilities.”

Equity valuations are favourable, at least relative to U.S. markets. It’s a spot where active management has the potential to add value.

Market volatility is hitting all four of these investment themes. Option trades manage that risk. Reyna’s team uses covered calls and cash-secured puts to get greater strike price flexibility, for example.

They also pair passive equity investments with active options management, “which prevents mismatch between the index options and the underlying securities, allowing the consistent income to act as the diversifier/defensive buffer,” Reyna explained in a follow-up email.

“You can reduce the volatility and get a reliable income stream,” he said. It beats taking calls from clients on the edge of their seat.

“There is an inherent sort of defence built into these options strategies because of how they’re structured. You give up some of the upside. If we recover, you’re going to wish you were long 100%, but I think that’s where investors are right now,” Reyna said. “There’s a middle ground between selling your position entirely and going all in.”