High volatility in global financial markets is expected over the coming years, requiring timely portfolio rebalancing. To achieve this efficiently, each of the two strategies offered by GAI benefits from:
♦ Synthetic products are inherently leveraged.
♦ Underlying long/short securities are investments in outperformance, hence resulting in LOWER premium costs.
However, if it were known that the long and short sides would trend asymmetrically, the premium cost would be HIGHER. The preceding is of a particular significance in the case of The Precious Metals/Global Equities Fund.
However, the perceived anomaly in equity index option prices has resulted in an equally strategic opportunity in The Income & Protection Fund, regardless the direction of the stock market.
Concerning the multi-asset class strategy, to one who believes that asymmetric performance will ensue, which would be consistent with the long term history of precious metals and global equities, today's premium costs would be viewed as cheap. Moreover, these premium costs are even cheaper as a result of today's precious metals and global stock indexes' historically low volatility levels.
Indeed, the product team foresees asymmetric performance between precious metals and global equities, and therefore views premiums as extremely undervalued in both asset classes. Premium levels have created extraordinary strategic opportunities, albeit in different contexts with respect to each fund product.
While the U.S. Equity Index Income & Protection Fund’s strategy is engineered to produce gains after positive quarters, its principal design is to generate 65 – 95% profits after sharp bear market-style declines, as evidenced by backtests which, when viewed together, aim to benefit from any type of market that is foreseeable over any reasonable period of time.
Perceived pricing anomalies, which have led to two differentiated strategies, aim to protect investor portfolios via defined risk and asymmetrically performing strategies, thereby requiring little capital investment to achieve portfolio rebalancing at a time when client wealth is, effectively, inordinately exposed to a deflation in financial asset prices.
Given the nature of the products, coupled with market expectations, GAI provides investors with timely, strategic profit opportunities which, given the aforementioned volatility, should result in superior gains.