Recently, JD sat down with Keith Black, Managing Director of the RIA Channel, to discuss using options to transform asset allocation.
Aptus has two sides to its business, one managing options-based ETFs and the other helping advisors manage and grow their practices.
Both sides are designed to improve asset allocation, the key to investment success driving over 90% of portfolio returns. Introducing options into a portfolio can both reduce downside risk, and facilitate more upside capture through a higher allocation to equities.
Monetary and fiscal policy has created persistent inflation, which raises required return targets as budget deficits eat into purchasing power. While investors may be tempted by 5% returns on Treasury bills, the ability to compound at high real rates can only happen with the help of risk assets.
In the 1980-2020 period, investments in US fixed-income markets have provided positive returns at a low correlation to equity markets. Since then, we’ve seen that this combination is no guarantee. Fixed income can be viewed as a diversifier, but its status as a portfolio protector comes and goes.
Aptus views risk differently, rating the long-term loss of purchasing power as an even greater risk than periodic corrections. Investors should have goals to maximize the long-term compounded returns of their portfolio rather than focusing on short-term drawdowns.
Portfolios implementing options-based strategies can put themselves in position to both protect against shock events(left tail), and participate in market upside(right tail). Our focus is on helping advisors help clients embrace what we think is a more reliable path to successful outcomes.
This podcast was recorded on July 8, 2024.The opinions expressed are solely those of the podcast participants and do not reflect the opinion of Aptus Capital Advisors. The opinions referenced are as of the date of recording and are subject to change without notice. This material is for informational use only and should not be considered investment advice. The information discussed herein is not a recommendation to buy or sell a particular security or to invest in any particular sector. Forward-looking statements are not guaranteed. Aptus reserves the right to modify its current investment strategies and techniques based on changing market dynamics or client needs and there is no guarantee that their assessment of investments will be accurate.
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