With a smoother and consistent experience, there is a better chance that investors will stick with an investment and their investment plan. Consistent results may provide better basis for financial plans as the outcome uncertainty and timing risk is minimized much more. We seek to do this with our hedging strategy, the Defined Risk Strategy (DRS).
We can see how hedging can help provide a smoother ride in the chart below. It contains the same twelve decades for the Swan DRS Select Composite:
Source: Zephyr StyleADVISOR. All data based on historic performance of the Swan DRS SMA Select Composite. Prior performance is not a guarantee of future results.
The DRS Select Composite returns display a remarkable degree of long-term consistency. The worst of these twelve decades was 6.31%, the best was 9.15%. The range of outcomes on an initial $100,000 investment is a low of $184,632 to a high of $240,110. It is also important to note that all but one of the decades include not only the major bear markets of 2000-02 and 2007-08, but also numerous short-term corrections like the Russian default/LTCM crisis of 1998, the “flash crash” in May 2010, and the U.S. debt downgrade in August 2011. The DRS has successfully weathered such events and has historically provided very smooth returns.
The table below summarizes and compares the results of the Swan Defined Risk Strategy Select Composite and the S&P 500:
Source: Zephyr StyleADVISOR. All data based on historic performance of the S&P Total Return Index and the Swan DRS SMA Select Composite. Prior performance is not a guarantee of future results.
How has Swan been able to achieve these results?