Phillip Toews, CEO of Toews Asset Management, joined Keith Black, Managing Director of RIA Channel, to discuss buffered ETFs, which may allow investors to participate more in market gains and less in market losses.
The Toews Agility Shares Managed Risk ETF (MRSK) is designed to dynamically participate in the upside of the equity markets while hedging against market declines. The fund takes long positions in equity index futures and long-term equity index put options while selling some short-term call and put options to mitigate some hedging costs.
Toews is writing a book on the behavioral portfolio, where portfolios can be designed to offset some behaviors that make investing difficult. For example, building downside protection into a portfolio can reduce the temptation for investors to sell during a market decline. Behavioral coaching for investors can be more effective if portfolio construction leads to performance that mitigates emotions that may cause investors to make poor decisions.