After a long period of controlled volatility and low interest rates, what now?

 

Customers needing downside protection,  or a higher level of confidence about portfolio outcomes, need to consider how their risk and volatility will be managed.

The extended period of low interest rates have led to elevated share market valuations. Any market reversal threatens longer-term investment plans.

Investors are broadening the way in which they consider risk management, and increasingly seek to incorporate non-correlating investments into their diversified portfolios.

Institutional investors may consider portfolio insurance, to incorporate either a portfolio hedge for protection, or to include a ‘volatility position’ into their asset allocation … this means doing things a little differently. In 2018 we see them looking to include assets which will earn a positive return in any turbulent period. They see that these volatility assets have payoffs derived from the level of realised market volatility.

Retirees can ill afford experiencing the full impact of a big market downturn. In 2005 we saw that investors were taking too much risk in search of higher returns. Notably they held hidden risks, resulting from a search for high income.

For retail investors, the core wish is to more confidently build a portfolio that balances return, income and acceptable risk.

Denning Pryce funds balance risk and return – and reduce downside volatility whilst paying quarterly cash distributions.

With partners Ironbark and Zurich Investments, we offer both global and Australian funds. Our Denning Pryce funds fit well in a balanced portfolio.

Building on a consistent track record

 

Our original equity buy-write funds are provided by Zurich Australia Investment Management. They have operated since prior to the 2008 crisis. Asset consultants have commented on the quality of their downside volatility management, and their performance across the  unique period of very low market volatility (2012 – 2018) when mainstream sharemarket assets have done well for investors.

We have subsequently partnered with Ironbark Asset Management. The Ironbark Denning Pryce Australian Tailored Income Fund has, since 2006, earned returns from dividends, trading gains, franking credits, and option premiums. This fund now applies a variety of volatility management strategies, with specific risk and return objectives. The fund has reduced volatility (27% less than ASX), and has reduced the impact of the 55 monthly market falls that occurred since 2006 (by an average of 25%).

The Ironbark Denning Pryce Global Tailored Income Fund has been a low risk fund with quarterly cash distributions, trading since 2010. It combines global equity and options into a defensive portfolio which is attractive for conservative diversified allocations.

 

 

How we invest Ironbark funds Zurich Investment funds