Gib Watson, Chief Strategy Officer, Swan Global Investments discusses portfolio allocation considerations and managing risk in today’s rapidly evolving investment landscape.
In this persistently low yield environment, bonds don’t do what they once did in a portfolio. Historically bonds have played two vital roles in a traditional 60 / 40 portfolio: generating income and capital preservation. Going forward, Swan believes bonds won’t effectively deliver on both of those roles. Bearish on bonds, the firm predicts a big allocation to bonds will leave investors stuck with the possibility of duration risk or lack of income. On the equities front, markets have seen both record highs and unprecedented volatility.
Swan’s Defined Risk Strategy is designed to deliver consistent, long term returns. This goals-based approach looks beyond the Modern Portfolio Theory’s 60 /40 rule and instead centers around staying invested in the market, but offering protection through long term put options. Advisors can leverage this strategy in a fund, separately managed account or model.
Gib Watson is Chief Strategy Officer at Swan Global Investments, LLC, a leading provider of hedged global equity solutions, separately managed accounts, and mutual funds.
Gib has more than 30 years’ experience as an advisor, entrepreneur and full-cycle executive in the wealth management industry. After leading the Wealth Management and Executive Financial Counseling divisions at Asset Management Group (now AMG National Trust Bank) and serving as National Managing Director of the Investment Advisory Services practice for KPMG LLP, he learned the art and science of advising ultra-high net worth families and corporate executives in all phases of personal finance and investments.
To learn more, register for Swan’s webcast: Redefining The Modern Portfolio: Challenging Conventional Wisdom in an Unconventional World
While 2020 has been a year to forget, it’s not over yet. In the aftermath of COVID-19, capital markets appear unhealthy. The outlook is dire for bond returns, while equities seem irrationally exuberant yet again. The challenge of allocating capital, managing risk, and keeping clients invested has intensified. What should the ‘modern portfolio’ look like going forward? See how hedged equity can remedy portfolio construction challenges and serve the best interests of long-term investors and retirees.