As discussed in our November Market Perspective, an increased frequency of low multi-year annualized returns and large drawdowns has reduced the effectiveness of long-term fixed income as a risk-reducing diversifier. This is causing many investors to seek reliable hedges to equity market volatility that can replace or compliment fixed income in that role. We believe that index option-based tail risk hedging focused on convex payoffs is a compelling solution. Please read Convexity: A Powerful and Customizable Approach to Tail Risk Hedging to learn more.
*For more information and access to additional insights from Gateway Investment Advisers, LLC, please visit www.gia.com/insights.