Most investors, happy with the performance of their (mostly passive) portfolios over the last decade, are understandably reluctant to divert funds from their trusted advisor who has done so well for them since the last major market crash… which is by now a distant memory. Recently however, I am reading more commentary from the large wealth managers bemoaning the difficulties of the current investing prospects. In general, they cite such things as:
As a result, wealth advisors such as JP Morgan are suggesting to their wealthiest clients increased allocations to defensive private alternative assets that produce income and have low downside risk. These include things such as:
Adjusting investment exposures to best respond to changing market realities is how the wealthiest investors stay that way. For many investors without sufficient wealth or intestinal fortitude, riding through a major market correction and relying on another government sponsored recovery may not be a viable scenario. But they too can proactively invest like the wealthiest, without having to commit large sums or possibly figure out how to gain exposure to backbone transportation or infrastructure assets. There are some infrastructure themed ETFs and mutual funds available, but they have demonstrated periods of significant drawdown when held passively. Senior secured credit exposure comes with interest rate risk. Downside risk in these defensive investments can be managed with hedging that comes with some complexity and cost.
Trendhaven’s Managed Risk strategy offers high income and the downside protection of a tactically managed exposure to higher yielding US corporate bonds. Over the 27+ year life of this strategy, it has proven that the best offense is a good defense. If your fear of missing out on a bull market becomes tempered with a fear of loss, you can increase allocation to a tried and proven absolute return approach.