Several academic studies have shown that people, on average, fear loss much more than they appreciate gain. Most investors want the magic formula: sizable returns with no risk. They want to grow wealth or live off the income generated from investments while also ensuring they mitigate loss. Is this possible? Of course not, but “absolute return” strategies focus in on this objective. These strategies have long been reserved for institutional investors, such as pension plans and university endowments. However, new technology from firms like SMArtX has “democratized” availability of these strategies for retail investors and their advisors.
Typical asset allocation might include a combination of stocks, bonds, cash and/or real estate which is an effective investment method, until it’s not (see: Financial crisis of 2007-2008). To participate in market gains while protecting against downside risk, many institutional investor portfolios contain some allocation to alternative investments which have low correlation to traditional investments. These alternative investments might include long/short, short-only, and hedged equity among others. The main objective of these approaches is to not lose as much in down markets, make most of the market in up months, so volatility is lower, and they compound out higher over time.
Most advisors spend a majority of their time meeting with clients or preparing to meet with clients which leaves little to no time for developing asset allocation strategies to navigate bull and bear markets. Aside from hiring more employees, advisors have the option to essentially outsource this important, time-consuming function. SMArtX is the first unified managed account (UMA) platform to allow actively traded long only, long/short, and options strategies through a single brokerage account. Using proprietary technology to mimic trades from the model strategies, SMArtX provides real-time performance figures, intra-day liquidity, and access to traditional and alternative strategies from firms like BlackRock, Legg Mason, and more at low investment minimums (some as low as $5,000).
SMArtX, which offers access to nearly 250 strategies from 80 different investment management firms, is available exclusively to SS&C Advent clients. If you’d like to learn more about SMArtX, please visit their website or register to attend one of their upcoming breakfast events.
Announced in February 2017, SS&C Advent Axys, APX, and Black Diamond clients have access to a tight integration with HedgeCoVest’s SMArt Xchange (SMArtX) service. Guest author, Alex Smith-Ryland, is the CMO of SMArtX Advisory Solutions. The views and opinions expressed in this blog post are those of the author and do not necessarily reflect those of SS&C Advent.