While investing in hedge strategies as a core component can be a prudent risk management strategy, it is critical to understand the risks of overinvestment. This blog delves into the complexities of allocating to hedge strategies, as well as the importance of setting realistic expectations for yourself and your clients.
Rick Gonsalves
Most risk metrics only look at how much a price bounces around, but they don't tell you how a client feels when their portfolio is in the red. In this post, we introduce the Ulcer Index—a new tool on our iQUANT Factcards and Portfolio Finder that measures financial stress by looking at both the depth and the duration of market drops.
Learn why this "misery meter" is a better alternative to Max Drawdown, how it works alongside our worst-case CAGR ranges, and why it is the key to helping your clients stay the course during volatile markets.
Rick Gonsalves
We all look at the leaderboard. It’s natural to want the winner. But chasing the highest number is often a strategic error that we call the "CAGR Trap." You end up forcing a volatile strategy into a conservative slot just because the backtest looked pretty. That’s not risk management; that’s setting yourself up for a difficult conversation. When the market rotates, the tracking error will cost you more in client trust than you ever gained in extra returns.
Rick Gonsalves
Too often, investment professionals judge a portfolio by its individual parts rather than its overall construction. But just like raw eggs and flour aren't appetizing on their own, no one ingredient defines the quality of the cake. A hedge asset isn't supposed to outperform—it’s meant to protect when stocks falter. Ignoring its role because it underperforms in bull markets misses the point entirely. Smart portfolio management is about how the components work together, not how they perform in isolation.
Rick Gonsalves
More advisors are using term-maturity bond ETFs instead of individual bonds to build simple, efficient bond ladders. This guide breaks down the key differences, helping you weigh diversification, control, cost, and convenience—so you can choose the right fit for your fixed-income strategy.