The Benefits of Index Investing - with Protections Against Market Downturns
The Benefits of Index Investing - with Protections Against Market Downturns
What Is Defined Outcome Investing?
Defined outcome investing offers customized, pre-determined exposure to market gains along with clearly defined downside protection, helping investors limit losses during market declines while still participating in potential upside.
Unlike traditional portfolios, this is an ETF strategy that allows us to more accurately manage risk using upside caps and downside buffers. An additional benefit is that this allows us to meet our goal of strategically moving to more favorable risk-return outcomes through the year as the market fluctuates.
This program is built for clients with a minimum investment of $1,000,000. Fees are 0.90% of AUM per year.
Step 1
Define Your Risk
We sit with each client to assess their personal risk tolerance. Then we build their portfolio with one of three defined options: conservative, moderate or aggressive.
step 2
Buy the Index
All portfolios use proprietary index strategies. We invest in the S&P 500, Nasdaq 100 and Russell 2000, through their respective ETF’s, Futures and Options contracts.
step 3
Add Downside Protection
We offer two types of downside protections: a buffer, which limits losses during downturns, and a floor, which sets the maximum loss.*
step 4
Set the Upside Cap
We review and set each clients personal risk tolerance – with “aggressive” portfolios providing the most upside / lowest protection and “conservative” portfolios provide the least upside / most protection.*
* There is no guarantee that the downside protection sought by a buffer or floor will be successful. See our disclaimer for more information.
How Defined Outcome Investing Works
Defined Outcome Investing strives to combine the best of both worlds. These structures allow investors to realize a portion of the upside potential of index investing – with predefined, built-in protection against downside losses.*
As an added benefit, after a portfolio is set up, there is the potential to adjust into better outcomes – including a higher upside capital and greater downside protection.*
downside protection
Known as a buffer, this may limit losses by a predetermined amount. For example, a 10% buffer protects investors from the first 10% loss, while a 15% buffer protects against the first 15% loss.*
upside cap
As a trade-off for downside protection, the upside cap limits the maximum percentage an investment can earn.
* There is no guarantee that the downside protection sought by a buffer or floor will be successful. See our disclaimer for more information.
Benefits of Harborside’s Investment Strategy
Defined Outcome investments have a built-in buffer against losses. While the stock market has tended to go up over long periods of time, during shorter periods, stock market losses are common and unpredictable. Our approach delivers measurable risk, flexible structures and outcomes that aim to deliver on defined parameters.*
Protection Against Losses
With traditional buy-and-hold investing, when the market goes down, the investor absorbs 100% of the losses. Our strategies aim to offer certain protection against these losses, with defined, built-in buffers.*
Your Choice of Risk Tolerance
We build portfolios based on one of three risk preferences – conservative, moderate or aggressive. Each of these strategies has a downside buffer & upside cap that is specific to that risk structure.*
Greater Peace of Mind
We aim to deliver precision, clarity and confidence. No matter what the markets do, our goal is to have already planned for it.
* There is no guarantee that the downside protection sought by a buffer or floor will be successful. See our disclaimer for more information.
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