Understanding Defined Outcome Strategies
Defined outcome strategies are financial tools that allow investors to explicitly choose their participation in market gains and their protection levels against market losses. These strategies are tailored to match the investor’s risk tolerance and financial goals. By using a combination of Exchange-Traded Funds (ETFs) and index options, investors can achieve tax-efficient implementation of these strategies.
The primary objective of defined outcome strategies is to provide a structured approach to market exposure. Investors can select an index to track, set upside caps, establish downside buffers, and determine the outcome period. This structured approach helps in aligning investments with investors' priorities, concerns, and risk tolerance.
How Defined Outcome Strategies Mitigate Market Volatility
One key benefit of defined-outcome strategies is their ability to mitigate market volatility. By setting predetermined outcomes, investors can protect themselves against significant market downturns while still participating in market gains up to a certain cap. For instance, strategies like NorthCoast Buffer 10 or Buffer 20 offer market growth participation with a 10% or 20% buffer from downside risk, respectively.
These strategies provide a level of certainty and protection, which is especially valuable during periods of high market volatility. By limiting the downside exposure, investors can preserve their capital even when the market experiences significant fluctuations.
Customizing Strategies to Align with Investor Goals
Defined outcome strategies are highly customizable to fit each investor's unique goals and risk tolerance. Whether the objective is capital growth, capital preservation, or income generation, various strategies serve different purposes. For example, the NorthCoast "Growth" strategies offer outsized market growth participation with a market-matching downside, while "Preservation" strategies focus on limiting market upside with no principal risk.
Investors can also choose strategies that generate yield with downside risk protection, such as NorthCoast Income Buy the Dip 10 or Buy the Dip 20. These strategies generate yield while waiting to buy equities after a market dip. This customization allows investors to align their investment strategies with their financial goals and risk tolerance.
Implementing Defined Outcome Strategies for Long-term Wealth Preservation
Implementing defined outcome strategies is a strategic approach to long-term wealth preservation. By balancing market exposure with risk management, these strategies help investors achieve their financial goals while protecting their capital.
Incorporating defined outcome strategies into a diversified investment portfolio can enhance overall risk management and ensure that the investor’s wealth is preserved over the long term. This approach allows investors to navigate market volatility with confidence, knowing that their investments are aligned with their risk tolerance and financial goals.
NorthCoast Asset Management is a d/b/a of, and investment advisory services are offered through, Kovitz Investment Group Partners, LLC (Kovitz), an investment adviser registered with the United States Securities and Exchange Commission (SEC). Registration with the SEC or any state securities authority does not imply a certain level of skill or training. More information about Kovitz can be found at www.kovitz.com.
NorthCoast and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.
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This material should not be viewed as a current or past recommendation or a solicitation of an offer to buy or sell any securities or investment products or to adopt any investment strategy. The reader should not assume that any investments in companies, securities, sectors, strategies and/or markets identified or described herein were or will be profitable and no representation is made that any investor will or is likely to achieve results comparable to those shown or will make any profit or will be able to avoid incurring substantial losses. Performance differences for certain investors may occur due to various factors, including timing of investment. Investment return will fluctuate and may be volatile, especially over short time horizons.
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