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Defined Risk Strategy 2017-09-25T19:51:53+00:00
Celebrating 20 years of the Swan Defined Risk Strategy

The Defined Risk Strategy

Helping investors grow and protect wealth since 1997.

We devel­oped the Defined Risk Strat­e­gy (DRS) in 1997 as a way to offer investors an inno­v­a­tive way to remain invest­ed for growth, while min­i­miz­ing mar­ket risk.

The DRS is a time-test­ed invest­ment approach that has been applied to var­i­ous asset class­es and avail­able in a range of invest­ment vehi­cles.

Why The Defined Risk Strategy

Seeking a Better ‘Buy and Hold’

Mar­ket risk, also called, sys­tem­at­ic risk, can­not be elim­i­nat­ed through diver­si­fi­ca­tion, though it can be hedged against.”Investo­pe­dia

Many investors strug­gle to ‘hold on’ when los­ing mon­ey, often lead­ing them to ‘buy and fold’.  Research by Dal­bar, Inc. and oth­ers repeat­ed­ly doc­u­ment the impacts of loss­es and emo­tions on investors’ real­ized returns.

So we seek to help investors hold on, by los­ing less and smooth­ing out the ride.

Always Invest­ed — We believe that mar­kets tend to go up over time, so we remain always invest­ed.

Always Hedged — We also believe severe loss­es can derail investors from their goals, so we remain always hedged.

In an industry focused on products, we’re focused on a solution.

The Defined Risk Strat­e­gy seeks to address many of the most press­ing chal­lenges that investors and advi­sors face today and beyond:

  • Invest­ment return in a low yield world
  • Retire­ment income chal­lenge
  • Tim­ing and sequence of returns risk
  • Bear mar­ket pro­tec­tion
  • Tax effi­cien­cy

How The Defined Risk Strategy Works

Buy, Hold, and Hedge 

Our dis­tinct invest­ment phi­los­o­phy dri­ves our Always Invest­ed, Always Hedged process.

The Defined Risk Strat­e­gy (DRS) is designed to pro­vide sta­ble returns over a full mar­ket cycle, while hedg­ing against large stock mar­ket declines. We pur­sue this goal through a rules-based, active­ly man­aged hedged equi­ty invest­ment process.

Swan Defined Risk Strategy - Investment Process

The Defined Risk Strategy Investment Process:

  • Always invest­ed to par­tic­i­pate in mar­ket appre­ci­a­tion over time
  • Hold­ing index-based ETFs
  • Always hedg­ing invest­ments with puts
  • Gen­er­ate mar­ket-neu­tral income through the use of options
  • Fol­low­ing a rules-based process to elim­i­nate the impact of emo­tions on invest­ment deci­sions.
Review the DRS Process

A Legacy of Success

The DRS was launched in 1997 to pro­vide investors with a bet­ter way to invest.

So how’d we do?

Swan Defined Risk Strategy - Investment Implementation

Maximize Wealth by Minimizing Losses

The mar­ket is unpre­dictable, mak­ing it dif­fi­cult to time the mar­kets or con­sis­tent­ly pick out­per­form­ing stocks. That’s why we believe that the key to wealth cre­ation is to remain invest­ed while reduc­ing down­side risk.

By defin­ing the risk with a hedg­ing strat­e­gy, we seek to rede­fine the risk/return pro­file of the port­fo­lio.

See the DRS Tar­get­ed Returns
Swan Defined Risk Strategy - Investment Approach

A Long Track Record of Success

Our con­sis­tent approach offers investors a bet­ter way to grow and pro­tect wealth.

The Defined Risk Strat­e­gy is designed to out­per­form the under­ly­ing bench­mark over a full mar­ket cycle (bull and a bear mar­ket). Since incep­tion in 1997, the DRS has done just that.

See More DRS Per­for­mance

Swan Defined Risk Investing

The strategy’s suc­cess prompt­ed us to apply it across mul­ti­ple prod­ucts and assets, pro­vid­ing our clients with addi­tion­al oppor­tu­ni­ties to use this time-test­ed approach.

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DRS SMA

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DRS FUNDS

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DRS CIT

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DRS OVERLAY

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RE

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*Source: Swan Global Investments and Morningstar; the S&P 500 index in an unmanaged index, and cannot be invested into directly. Past performance is no guarantee of future results. The performance numbers referenced above are used for illustrative purposes to indicate the DRS’s performance during Bear Market conditions.