While the markets have undergone significant changes, the Defined Risk Strategy has not. The overall goal remains the same — maximize the return-risk trade-off by minimizing the impact of down markets. We remain “always invested, always hedged” by actively hedging our holdings in the market. How has Swan delivered on this goal?
Swan Defined Risk Strategy Select Net-of-Fees
Growth of $100,000 — July 1, 1997 to June 30, 2017
Source: Zephyr StyleADVISOR Zephyr StyleADVISOR, Swan Global Investments, and Morningstar. The Barclays U.S. Aggregate Bond Index and the S&P 500 Index are unmanaged indices, and cannot be invested into directly. Past performance is no guarantee of future results. DRS results are from the DRS Select Composite, net of fees, as of 6/30/2017. Structures mentioned may not be available within your Broker/Dealer.
The Swan Defined Risk Select Composite has outperformed both the S&P 500 and a blended 60/40 stock/bond mix, on both an absolute and risk-adjusted basis. It’s important to keep in mind what that blue line incorporates. It’s not just 20 years….it’s all those crises listed above. The DRS has been battle-tested through all of the aforementioned events.
Of course, someone might legitimately claim that very few people would have been invested in the DRS for that full 20-year period. The previous graph represents the entire history of the DRS.
What if someone had only been invested for a sub-period…say, for example, a period of 10 years rather than 20?
Source: Zephyr StyleADVISOR, Swan Global Investments. All data based on historical performance of the S&P Total Return Index and the Swan DRS Select Composite. Prior performance is not a guarantee of future results.
The above comparison is one of Swan’s most popular graphs showing ten, 10-year investment periods. The first period is 1/1998 to 12/2007; the last period is 1/2007 to 12/2016. Each line represents a ten-year investment period with a different inception date (when the initial investment was made).
In other words, the lines chart the “ride” investors experienced over 10 years in the S&P 500 (left) or the DRS (right), if they were to simply change the date of their initial investment.
The contrast in outcomes is stark. While the unhedged S&P 500 has had outcomes all across the board, the DRS has been able to maintain a much tighter range of outcomes by mitigating the impact of those two big bear markets.
We have run similar analysis over 3, 5, and 15 year rolling periods, which are available to investment professionals and advisors upon request. Investors should contact their financial advisor to learn about the significance of rolling period returns.