In March, when markets crashed due to the coronavirus pandemic and swirling uncertainty that ensued, nobody was prepared. Although the markets swiftly rebounded and ended the year with one of the strongest finishes in history, many investors had received a sharp lesson in the value of being prepared for the worst.
The stock market is clearly not in sync with all of the struggles the U.S. is facing in the real world. However, investors can adequately prepare their portfolios for the unexpected while simultaneously seeking to participate in future market gains.
At Swan, we believe our hedged equity approach, the Defined Risk Strategy, is well-positioned to help investors mitigate risk and potentially preserve assets should the markets sell off again. By staying always invested in low-cost ETFs, our Defined Risk Strategy seeks to generate consistent long-term rolling returns while also limiting risk during major market downturns by remaining always hedged using long-term put options.
Portfolio diversification is a good first step, but products like Swan’s first-ever Hedged Equity ETF go a step further by applying an active investment approach with the goal of providing a smoother ride.
The strange, devastating and unpredictable year that was 2020 may finally be past us, but there are still many challenges that lie ahead. Millions of Americans remain unemployed, the economy is not yet back on track and the country is still suffering through the worst of the COVID-19 pandemic.
As the U.S. looks to forge a new path ahead in 2021, investors would be wise to learn from the trials and tribulations of 2020 and prepare accordingly.