How the Defined Risk Strategy Works

Explaining the Defined Risk Strategy to Your Clients

The Defined Risk Strategy is our unique hedged-equity approach that seeks to generate consistent returns and prevent your clients from losing big. Our three-step, rules-based and repeatable investment strategy removes emotions from the investment process.

Step 1: Invest in Equities

For the first step, we passively invest in low-cost equity index ETFs so you clients can participate in market growth over time.  

Your client will be always invested in the market.

There is no market timing or stock picking.

Step 2: Hedge the Equities

Because the markets can be volatile and unpredictable, we seek to smooth the ride for investors so they can remain calm and in the market. We make it easier for your clients to buy and hold. 

We actively manage long-term put options to hedge, or reduce the risk of loss, in the investment. This put-option has a 2-year expiration to ensure your client isn't caught rehedging during a bear market.  

The purpose here is to avoid large losses and thus long recoveries that can derail investors from their goals. 

With our hedge in place, you clients can remain confident and calm about their investment. 

Step 3: Seek Additional Return

Since there is a cost to carry the long-term hedge, we seek to offset it and improve overall return with added short-term options trades. This follows a disciplines, rules based approach.


Download the client-approved brochure here