Equity Risk Management Strategy

Tactical allocation strategy that seeks to adjust a portfolio’s equity exposure to provide downside protection and volatility control without curtailing the upside


  • Incorporating the Risk Management Strategy involves carving out a portion of an equity portfolio for tactical allocation (could range from one-third to a maximum of 50% of the portfolio)
  • Risk Management Strategy would be fully invested in the S&P 500 when market conditions are favorable
  • When conditions are deemed unfavorable, the Risk Management Strategy is shifted to cash or inverse (short)

How It Works

The Risk Management Strategy analyzes technical and fundamental indicators to determine the current market condition and recommends the appropriate tactical allocation
  • The fundamental indicator tracks the trend in changes of expected earnings for the S&P 500. Two or more consecutive months of declining expectations increase the risk of large market losses and is considered unfavorable, while two or more consecutive months of increasing expectations is considered favorable.
  • The technical indicator determines the market favorability based on the current level of the Dow Jones Industrial Average (Dow)
  • This strategy may invest in inverse ETFs