Approach
What Makes Us Different
Several other managers provide tail protection but constantly bleed capital until a crash occurs. We believe this is a suboptimal approach to tail-risk hedging. If not timed correctly, the gains made during a crash may not offset the losses created during normal environments. A tail-risk hedge that constantly bleeds can end up being a losing proposition over the long run.
We have several proprietary strategies that our portfolio managers have developed and traded over the last decade that provide consistent returns. These returns offset the option premiums from our large positions in convex equity derivatives which benefit from volatility.
These proprietary strategies are designed to provide positive returns while minimizing the addition of risk to the portfolio.
Why Do Investors Approach Us
Investors value tail risk protection for several reasons:
Family Office
Has significant equity exposure and needs to protect the family’s equity assets from a crash for their peace of mind. Preserves wealth for the next generation.
Individual
Needs protection against market crashes that could come at inopportune times in their life and reduce their options. Allows them to keep their current lifestyle now and during retirement.
Asset Manager
Wants to avoid reputation damage and investor outflows during crashes. Gets a large reputation boost and takes unsatisfied clients from unhedged managers. Adds a cost-effective hedging product to their menu of investment options.
Foundation
Needs to preserve capital so they can meet their philanthropic commitments. Needs stability so they can make future philanthropic commitments.
Opportunistic
Believes a crash is likely in the near future.