The Hedged Equity Strategy

By “layering” Structured Notes on top of a long equity sleeve, clients can enhance equity upside potential, with an added level of downside protection.

Halo’s Structured Note model allocation strategy complements traditional asset allocation approaches by rethinking the core-satellite approach.

A note enhanced strategy looks to maintain equity exposures clients and advisors are familiar with, but at a lower level of volatility than traditional sources of equity risk-return.

Classic core-satellite investing separates a portfolio of investments into two distinct segments: a core and a satellite. The approach builds upon the importance of asset allocation. However, an overemphasis on asset allocations can leave portfolios unexpectedly exposed to more risk than many investors want.

By reimagining this strategy, Halo prefers to think of a portfolio as a series of layers, rather than rings moving ever further from the core.

Using the Core-Satellite 2.0, Structured Notes are layered over existing asset allocations creating a more effective risk hedge while retaining upside potential or income opportunities greater than market rates.

U.S. Large Cap Core is a popular starting point for a reallocation strategy.

• Experience shows that advisors like getting comfortable with how notes work. Starting small promotes stronger commitment from advisors, and clients.
• Utilize the robust team of Halo Specialists to walk through our Halo Model Approach.
• Once an advisor is comfortable with portfolio construction and implementation considerations, consider broader allocations throughout the equity portion of the portfolio.