Measured Risk believes investing can be rewarding over the long term. But the main problem is, long term equity returns come with short term volatility that can have a devastating effect on our emotions, and as a result, our capital. When things get rough in the markets, it can rattle our commitment to our long-term goals. Each separately managed account (SMA) strives to reduce exposure from severe market risks by strategically maintaining an optimal mix of options, fixed income and cash.
MRP Core
MRP Core attempts to capture market gains through synthetic long exposure using call options on the S&P 500 Index or Exchange Traded Funds (ETF) tied to the same index. At inception, approximately 10-12% of the portfolio will be used to purchase these call options with a duration near one year. This allocation is subject to the potential for total loss at expiration.
Ideally, these initial option contracts will increase as the index rises, affording an opportunity to sell them for a profit and roll all or a portion of the profit into the fixed income allocation seeking to protect the profits from subsequent index declines. The balance and majority of the portfolio will be deployed into short duration fixed income securities, typically US Treasuries but can be other fixed income securities. This structure allows for unlimited upside potential if the market moves upward but provides a downside limit on equity losses if the market turns significantly negative.
MRP Lite
MRP Lite is similar to MRP Core except approximately 7-10% of the portfolio will be used to purchase call options, with the remainder in fixed income securities.
MRP Growth
MRP Growth is similar to MRP Core except approximately 12-15% of the portfolio will be used to purchase call options, with the remainder in fixed income securities.
View our Measured Risk MRP webinar
Larry Kriesmer, Portfolio Manager of MRP, joins Henry Rohlfs of Halbert Wealth Management, to introduce the Measured Risk Portfolio strategy.