What is the Defined Risk Strategy?

The Defined Risk Strategy is a unique hedged equity approach that blends passive investing and active risk management to help long-term investors grow and preserve their wealth.

In 1997, we developed the Defined Risk Strategy (DRS) to offer investors a client-centered, goals-based approach to generate stable returns and avoid losing big—two keys to growing and preserving wealth.

Our DRS investment solutions uniquely combine passive, low-cost investing with active risk management, offered in multiple investment structures and asset classes. 

The Defined Risk Strategy Process

The DRS is an options-based strategy that follows a repeatable three-step process with three components:

  1. Equity - It's always invested passively in equities, using low-cost ETFs for portfolio growth.
  2. Hedge - It's always hedged using put options to mitigate the risks of bear markets on an annual basis.
  3. Options - It actively manages shorter-term options to seek additional return to offset the cost of the hedge. 

The Defined Risk Strategy is a Hedged Equity Solution for Long-Term Investors

Our Defined utilizes put options to remain distinctly ‘always hedged’ to define risk on an annual basis and seek to mitigate losses, especially during bear markets.

We distinctly hedge using long-term put options to offer investors a long-term defense against bear markets so they can reach their long-term goals.

Put options have an inverse relationship to what they seek to protect. When the equity loses value, the put option increases in value, and vice-versa.

This counter-balancing investment approach seeks to not lose big.

 

 

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