Stock Market Investors Are in the Danger Zone. This All-Weather Investing Strategy Offers Protection
Stock Market Investors Are in the Danger Zone. This All-Weather Investing Strategy Offers Protection
Zeno Markets 8
We’re in a period of high inflation, with a war disrupting energy markets and the Federal Reserve raising interest rates.
The murky outlook calls for a multiyear cycle of central-bank policy moves that will be unfriendly to the stock and bond markets.
An investment approach that can take advantage of price movements across all assets — not only stocks and bonds — might serve you well, especially if volatility keeps you up at night, tempts you to sell into a declining market or causes you to chase performance.
One such example is the Standpoint Multi-Asset Fund BLNDX REMIX, which has about half of its assets invested broadly in stocks and bonds (mostly stocks) across developed markets through low-cost exchange traded funds. The rest of the money is used in futures markets that encompass currencies, energy commodities, gold and silver, industrial metals such as aluminum, copper, zinc and nickel, and grains and soft commodities such as sugar and coffee.
During an interview, Eric Crittenden, who co-manages the fund, explained its strategy and described how it places long and short trades in non-equity assets to give investors “a smoother ride” over the long term.
Promising start
There are dozens of mutual funds that use futures-trading strategies. Most are designed to mitigate risk in down markets by taking advantage of price movements, up or down, across asset classes. They can be used by investors to hedge against downturns in the stock market or bond market, as a complement to a portfolio of stocks or bonds, or funds that hold stocks or bonds.
The objective of the Standpoint Multi-Asset Fund is to perform both functions within the same portfolio, using a systematic approach to futures trading to limit risk while still pursuing long-term growth. That way an investor won’t have to make their own risk-management allocation decision among funds, and hopefully will be able to limit their own emotional reactions to market turmoil.
