With volatility on the rise, maybe it’s time to get tactical -- or it could be enough just to hold the markets.

ETF strategists differed on whether the recent stock market correction is a signal of more difficult times for investors to come, or just more noise amid continued growth, at “ETF Overweights and Underweights: Today’s Best Tactical ETF Strategies,” a Tuesday panel discussion at the ETF Strategy Summit in Dallas.

Despite recent volatility and reportedly high valuations, Carl Choy, principal at CKW Financial Group, argued that the market itself is a long-term investor's best tool for growth and preservation of wealth.

“The market represents today’s view, every single day, of its value, of the future profits it’s going to generate over time,” said Choy. “Maybe that’s why it’s so hard to beat.”

Choy said that CKW does make tactical moves to overweight and underweight certain parts of the market -- but also believes that the U.S. stock market is more-or-less attractively valued on a historic and forward-looking basis.

King, on the other hand, still believes that U.S. equities are overvalued.

Part of the reason Choy feels so strongly about valuations is that he thinks our economic and fundamental measurements are outdated and may not apply as easily in the information age.

“We have to ask ourselves if the numbers we use to analyze things are still correct and relevant? How we calculate GDP in dollars, is that still relevant? Is CPI still relevant? How do we calculate technological improvements? I think GDP is understated,” said Choy. “When my kid goes out and buys a scooter and decides to deliver food for Uber Eats, that’s not considered business spending and it’s not calculated as business expenses; it’s some kid buying a scooter to deliver food on Uber Eats and it’s calculated as personal consumption.

“A new world is happening … technology improvements aren’t measured in CPI, and perhaps CPI should be negative instead of positive,” said Choy. “Maybe the spread between returns and whatever that is, is different, and we should consider how it impacts the risk to our industry. Maybe that’s why passive is beating active.”

Tactical ETF strategists take different approaches to create better outcomes for the end investor, said Mansi Singhal, co-founder of qplum, an online RIA.

“The more immediate approach to alpha is through structuring; you use options or products and structure trades so your risk-reward trade off is acute and you’re more favored to get a reward from taking risk,” said Singhal.  “On the other side of the spectrum is outright prediction, it’s an outright view, while it’s tactical it’s still fairly long-term. Most of us end up in one of these categories.”

Qplum offers its clients tactical strategies more resembling the former, highly diversified portfolios often containing 45 to 80 ETFs with frequent trading and rebalancing with goals of generating alpha and managing risks.

Singhal says that her portfolios are currently overweight U.S. equities, international real estate and commodities. They have also recently shifted away from long-term fixed income into short-term bonds and TIPS.

Main Management, on the other hand, offers ETF rotation strategies to its clients with a primary goal of generating additional returns.

“Sector rotation can be a nice way to own U.S. equity markets at this point in the cycle,” said King, noting that there were opportunities to create alpha in sector rotation. “A lot of that is caused by the dispersion between different sectors in the S&P 500. Returns have been very concentrated -- consumer discretionary, technology and health care have been drivers of returns this year. You have other sectors in line with cash.”

King’s sector rotational strategy is currently overweight financials, with slight tilts toward technology, health care and materials, he said.

Main Management also offers country-sector rotation and a global tactical allocation strategy. Those portfolios have been overweight Japan, Mexico and China, said King.

Still, regardless of strategy, it’s hard to beat the market, said Choy, which makes tactical management difficult because market performance has become a default benchmark for many investors.

Investors can now get market exposure for free: Fidelity became the first to offer a zero-expense ratio mutual fund earlier this year, said King, who believes a zero-fee ETF is a likelihood in the near future. In some sense, no-cost ETFs already exist as some large firms generate revenue by lending securities from an ETF’s underlying basket of holdings and pass some or all of those revenues on to the end investor, offsetting the ETF’s fees.

“Our industry will continue to shrink,” said Choy. “The more you get fee compression, the more things move to free, the more we have to deliver something.”

And to some extent, automation and AI will continue to displace portions of the investment industry, said Singhal, but the technology is still in its early stages and there’s still plenty of space for a human element.

“Financial markets are not that simple; applying AI holistically to financial markets is not something that a firm has succeeded at yet,” said Singhal. “We have a long way to go in financial services. We will have driverless cars before we have AI end-to-end in financial management.”