You cannot buy life insurance post mortem, nor can you protect your portfolio after a correction.

Whilst investors have enjoyed a 10-year bull run since 2009, many of us have anxiety when we consider an impending correction, as witnessed in 2007-2009. For those of us that have been around longer, the 2000 - 2002 market, as well as the 1987 episode including "Black Monday" are scenarios, that few remember positively.

To refresh our memories, let's look at the past 3 "bear" markets, using the S&P as a guide.

August 1987 > December 1987 - The S&P fell from 338 to 221, a fall of 33.5% in a 3-month span.

March 2000  > October 2002 - The S&P fell from 1527 to 777, a fall of 49.1% in a 30-month span.

October 2007 > March 2009 - The S&P fell from 1565 to 682, a fall of 56.4% in a 17-month span.

 Remembering the most recent bear market, the DJIA hit a market low of 6,469.95 (March 6, 2009), having shed over 54% of its value since October 9th, 2007 high. 

Firms engaged in asset management lost clients and extensive AuM. Many were forced to close and of those still standing, employees were either re-assigned or lost their jobs.

The last crash triggered a wave of regulation and compliance by all domestic and international financial regulators as well as government watchdogs to reign in risk, in all of its forms. This may mitigate risk to a certain degree but certainly not prevent serious market corrections.

Nevertheless, whether the next correction is anywhere between 25% to 60%, is not that relevant. The case is not of "if", but "when" this correction will take place, and how well-positioned my firm and my book/portfolio are to limit damages.

 As money managers, the mandate is for the most part, to create a track record of sustainable returns that exceed that of the benchmark by which we are measured, in an environment of controlled risk, whilst simultaneously ensuring that our "hedge", is not too costly and holds up if the boat capsizes.

At Azzilon, we created an indexed model portfolio useful to Institutions, Investors, Asset and Fund Managers in time of uncertainties. It is a balanced portfolio with low volatility having as equity constituents the US major indices; DJ30, S&P500 and Nasdaq 100. But as we rebalance the portfolio regularly and slide the weights between equities and fixed income as needed we considerably reduce the portfolio risk.

As such, although the broad market correction in 2008 exceeded 30%, our index downside was 2%. Our index has generated a total return of 82% for the last 10 years, not bad for a defensive product. Our index 10 years historical performance was compiled by a Tier ONE Bank. Additionally, our index can be linked to;

 - Capital Guaranteed Notes issued by your own firm or an institution of your choice. 

 - Maturity/tenure could be; 3 years, 4 years, 5 years, 7 years or even 10 years.

A Tier One Bank already issued such a Note.

 - tenure 5 years

 - 100% Capital GUARANTEED at maturity

 - Participation ratio of 100% of the index performance

 A 100% Capital guaranteed Note by a Tier ONE Bank with an underlying index that has generated 82% over the past 10 years......in a DEFENSIVE product.

Is it really possible to completely protect AuM in the case of a catastrophic event or period of time, whilst maintaining exposure to a performant portfolio (investment universe) that is comprised of US Equities (S&P, DJIA, NASD equally)?

The answer is yes, most certainly yes. 

Should you wish to learn more, or schedule a short call, please feel free to contact us at ;

[email protected] or [email protected]

Thank you