Market Protection for Turbulent Times
Key Ideas
- Investors have traditionally used asset allocation as a way to maximize risk-adjusted returns, but in the three most recent market crises: Tech Bubble burst, Global Financial Crisis (GFC) and the COVID-19 crisis, most growth asset classes became highly correlated, reducing their diversification benefits.
- Risk-mitigation strategies (RMS) have therefore become an important element of asset allocation decisions.
- Since its inception in 1992, PGIM Quantitative Solutions' US Market Participation Strategy (MPS) has provided both upside participation in rising markets, and limited downside losses infalling markets.
- MPS compares well with other RMS, including low volatility, options-based protection and hedged equity strategies that are commonly used for risk management, uncorrelated alpha and downside protection.
- Using MPS as an equity or hedged equity substitute may provide higher risk-adjusted returns in a multi-asset portfolio; we offer MPS at a flat, asset based management fee, without carried interest or performance-based fees.
