For investors who want a more structured, defined outcome over a specified investment period.
We created the Structured Outcome Strategies (SOS Shield®) to provide investors with equity market appreciation, up to a cap, and a downside shield for a specified period, seeking to provide a more structured outcome.
The SOS Shield® Series are separately managed accounts, available in 3 variations, all of which include:
- Underlying equity holding (passive, held for a 12-month Outcome Period)
- Upside Cap (varies based on product and market conditions)
- Downside SOS Shield® (Conservative, Moderate, FLEX)
Distinct Benefits & Advantages
Structured Portfolio, Targeted Outcome: Select a desired target for market exposure with downside shield, over a specified target outcome period, to align with investor risk tolerance and investment objectives.
Lower Management Fees: 50 bps Management fee is substantially lower than competitive products and available on multiple platforms.
Tailored Start Date: Each strategy is structured for an individual client within a SMA, allowing for individualized shield and defined outcome targets (not commingled), as well as, investment start date per account. Each SMA is tailored to the investor’s objectives.
Limited Volatility: Provide equity exposure with less volatility. Exposure to the price return of S&P 500 combined with index options may provide a less volatile return profile than the underlying asset, and when combined with a downside shield, may offer an attractive portfolio management tool.
Perpetual Structure: The cap and shield are reset annually at the end of each outcome period. However, the SMA may be held indefinitely, providing investors a buy and hold investment opportunity.
Options & Hedging Experts: Managed by the leaders in portfolio hedging and options strategies since 1997.
Portfolio Construction for SOS Shield® Series
The portfolio seeks to provide a structured range of investment outcomes over a specified time period by combining 3 components: equity exposure, downside shield, and an upside cap. The structured outcome may only be realized for investors who remain invested throughout their specified period.
1. Equity Exposure
The portfolio will purchase a low strike call option (near zero), replicating a long position in the price returns of an underlying equity ETF, such as the S&P 500.
2. Downside Shield
The portfolio will buy a put option on the S&P 500 and then simultaneously write (sell) a put option at a price below that is equal to the predetermined shield levels for each strategy. The purchased put option provides a downside SOS Shield®, while the written put option will stop the shield at the predetermined level.
3. Upside Cap
The portfolio will write (sell) call options with strike prices at the capped level, generating the premium to help pay for the downside shield. Writing a call gives the seller the obligation to sell shares of the underlying asset at a strike price that is set above the current market price. If S&P 500 increases to the strike price of the written call option by expiration, the strategy will hit its cap and no longer participate in any further gains.