Defined Risk Investment Process

Invested for Growth, Hedged Against Risk

The Defined Risk Strategy is a time-tested hedged equity approach with a distinct investment process.

Our Process

Invest in Equities

Markets tend to go up over time, so we’re ALWAYS INVESTED in low-cost ETFs

Hedge the Equities

Severe losses can derail investors’ goals, so we’re ALWAYS HEDGED

Seek Additional Return

Actively manage a shorter-term options portfolio to help offset the cost of the hedge

When the market drops and the equity loses value, the hedge increases in value, and vice-versa.

This counter-balancing investment approach is engineered to NOT lose big.

Simple and Effective.


The effectiveness of the hedge and degree of downside risk mitigation varies with market conditions. The Defined Risk Strategy can and does have periods of losses.

Repeatable 3 Step Investment Process

Our unique hedged equity approach is driven by a three-step, rules-based and repeatable investment process, which removes emotions from the investment process.


The Defined Risk Strategy is uniquely Always invested, Always Hedged.

Step 1 - Invest in Equities

Always Invested – Equity markets tend to go up over time and outperform other asset classes over the long term.


  • So we invest passively (buy and hold) in low-cost equity index ETFs to participate in equity market growth over time.
  • Represents about 90% of the portfolio
Step 2 - Hedge the Equities

Always Hedged – While market crises are inevitable and unpredictable, suffering large losses and long recoveries can derail investors from their goals.

  • So we actively manage long-term put options to hedge, or mitigate the risk of loss, in the portfolio 
  • Represents about 10% of the portfolio
Step 3- Seek Additional Return

We know there is a cost to carry the long-term hedge.

  • So we seek to offset this cost and improve overall portfolio return by actively managing shorter-term options trades, utilizing a disciplined, rules-based approach. 

A Legacy of Success

The DRS was launched in 1997 to provide investors with a better way to invest over full-market cycles—generate consistent rolling returns and minimize losses during bear markets.


So how’d we do?

Helpful Insights and Resources

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