Stock market volatility heightens the sense of insecurity of risk adverse investors
Visit alternative 'Smart Beta' solutions listed in "Risk Mitigation - Downside Protections"
Funds featuring downside protection in its many shades and nuances could be simply defined as asset selections packaged with a measure of insurance
Investors need to consider both dimensions of the funds in the category - the equity sleeve and the 'insurance' guarantee
Asset selections of the equity sleeve may
- either challenge active fund managers
- or align passively with an index such as Nasdaq 100®
Downside protection insurance caters to many different investor preferences
- Option protection attached alternatively to a market index or to specific equities invested by the fund
- Rule-based and passively managed with protective puts bought – and calls sold – at defined % value of an index – such as 95-110 collars
- Actively managed option protection, adjusted according to market conditions, within a wide protective range at the advisor’s guidance
- Protective volatility futures complementing the equity sleeve of the fund
- Coverage of ‘insurance’ protection expense - by the sale of calls (limiting the potential upside of the fund), by asset yield or dividend pay-out
Because of adversarial performances, Cambria Tail Risk ETF
For deeper insights, rank the fund selection by performance or by volatility for the selected time period
Over time, fund price momentum signals trends of the last 5 days against a 20-day average
For comparison, select various time frames in the top right menu box, from 2 weeks to a full year (performance of some very recently listed ETFs may not be significant for lack of price data)
The benchmark, SPDR® S&P 500® ETF Trust