OVERVIEW

A Risk to Retirement

For years the market environment has been too intoxicating for many investors to remain disciplined. However, the return of uncertainty seen during the first quarter of 2020 serves as a wakeup call, especially for those nearing retirement.

The problem with not having a well-diversified portfolio is that with only a limited amount of time to save for retirement, not every investor can wait for the “average” return of equities to make them whole after a market downturn. And many fail to realize that it’s not only about the loss of monetary resources, but also the loss of time in which to make them back.

A $500,000 Portfolio’s Recovery from a 20% Decline

Those nearing retirement may not have time to rebound from significant losses.

Download PDF >

The annual returns of 3%, 7% and 11% are hypothetical and used to demonstrate how long it may take to recover losses over time. The returns do not represent or predict the performance of any fund.

Think it can’t happen? Think again. Millions of people were headed for retirement with heavy equity concentrations in 2008 when the Dow began its precipitous fall, losing about 54 percent when all was said and done some 16 months later.¹ With market indices still hovering around all-time highs, pre-retirees are tempted to play roulette with their retirement assets.

Learn more about our hedged equity strategies >

¹“Dow Jones Industrial Average,” WSJ.com

POTENTIAL BENEFITS

Alternatives: Preparing Portfolios for the Road Ahead

Investors nearing retirement face a challenge: how to generate real returns sufficient to meet their needs in retirement, while also protecting their savings against potential bear markets and black swans. Using alternatives in a portfolio may add a level of diversification by offering access to strategies with little or no correlation to traditional markets and help mitigate downside risk by utilizing trading strategies that attempt to counteract large market movements.

Diversifying Sources of Return
Alternatives have historically delivered more stability to investors over various market cycles.

Download PDF >

Past performance is not indicative of future results.
Source: Morningstar. Data from 12/31/96-12/31/19. Challenging periods for stocks and bonds are defined as equity bear markets and rising rate periods. Rising rate periods are the three largest during this time period and bear markets are the two largest during this time period. Alternative are represented by the Credit Suisse Hedge Fund Index, stocks by the S&P 500 Index, and bonds by the Barclays Aggregate Bond Index. Data reflects average annualized outperformance of alternatives versus bonds during rising rate periods (10/31/98-01/31/00, 06/30/03-06/30/07, 07/31/12-12/31/13) and stocks during bear markets (08/31/00-09/30/02, 10/31/07-02/28/09). It is not possible to invest directly in an index.

Visit the Alternatives Resource Center to learn more about Alternatives >

Alternatives Have Provided a Valuable Source of Additional Returns
Since 1994, alternatives have outperformed at least one element of an investor’s core* portfolio 77% of the time. With little-to-no correlation to traditional markets, certain alternatives can offer investors “true” diversification, while other alternatives may offer downside protection without sacrificing return potential.

Download PDF >

Past performance is not indicative of future results.
*Investor’s core is represented by stocks and bonds. Stocks are represented by the S&P 500 Index. Bonds by the Barclays Aggregate Bond Index and Alternatives by the Credit Suisse Hedge Fund Index. It is not possible to invest directly in an index.
Alternative investing is subject to increased risks including the possible loss of your total investment. Such strategies have the potential for heightened volatility and may not be suitable for all investors.
Investing in a long/short strategy, presents the opportunity for losses which exceed the principal amount invested. Diversification and asset allocation may not protect against market risk or loss of principal.

INSIGHTS

Learn More About the Potential Benefits of Alternatives in these Articles

RESOURCES

SOLUTIONS

Hedged Equity

CONTACT US