Bear Market Readiness
The US stock market is stretched to record limits across almost all metrics covering fundamentals, valuation, sentiment as well as technicals. The financial market rescue since the March 2020 economic collapse from COVID-19 is mostly behind us. The market euphoria created by news of the vaccine approval and rollout has created a market top, while the course of the pandemic and the ability of the vaccines to curb it are unknown. With the liquidity crisis avoided we now face a looming solvency crisis.
Back in early 2020, we warned investors of similar vulnerabilities in market conditions (see Bloomberg interview � Feb. 7, 2020.) We recommended specific measures to maximize profits then. While we couldn�t have predicted COVID-19, all the markets needed was a trigger to tip them over to create a windfall for our clients. There is more reason now than ever, to be positioned to gain from a market fall and the ensuing market volatility.
What We Do
We actively profit from market uncertainty while protecting traditional investment portfolios from it.
The Hercules Systematic Volatility Strategies are designed for investors seeking aggressive growth. Our strategies target market-neutral, risk-adjusted investment performance, (alpha) with low correlation to broad markets as well as traditional and other alternative asset classes. We do so by systematically trading in options on US Equity Indices over short time horizons. Our trading strategies focus on Index Trend Reversal, Premium Collection, Volatility Mean Reversion, and Event Sigma. They are based on backtested, market data based models and a rules-based investment process. The strategies effectively buy or sell insurance premia that price the uncertainty in equity-index movements resulting from market factors that influence the index.
These strategies seek to deliver investment outperformance beyond market averages over time by investing in market segments that offer the best prospect for sustained disproportionate long-term growth. They present an attractive solution to investors seeking high growth because a portfolio of such investments in focused market segments displays a secular growth trajectory that is potentially much steeper than sector and market indices, especially over longer time horizons. We offer 8 such strategies and group them into 3 categories: Thematic, Alternative, and Income. Our Artificial Intelligence, Blockchain, and E-commerce investment strategies make up three central disruptive innovation theme-based offerings as a means to outperform major market benchmarks through economic cycles. Next, our Alternative investment strategies invest in the energy and commodity sectors to provide the potential of playing an essential role in an investor’s portfolio, by contributing to a diverse mix of portfolio asset classes, each with their own unique risk and return profiles. Lastly, our Income strategies bank on the predictable nature of high dividends as a part of the investment return, particularly when it is part of a diversified portfolio of dividend payers across industries and risk profiles. A diversified mix also lends added stability to the income stream. All of our Growth strategies are Market Risk hedged so that investors are protected from losses when markets fall due to temporary shocks, recessions and financial crises. We differentiate ourselves from our competitors by actively managing and risk controlling our strategies.
In meeting your unique investment goals, the investment team at Hercules Investments creates investment portfolio end-solutions customized to achieve your return objectives after you have understood the Investment Factors influencing future portfolio performance and are comfortable with the requisite risk exposure to achieve your return objective. Our custom all-weather portfolio solutions are grouped into 3 categories based on your investment objective and risk appetite. They are: Defensive, Moderate and Growth. Our client onboarding process guides you through a customized and disciplined investment plan. The plan incorporates criteria such as your objective, contributions, risk appetite and liquidity needs to calculate a risk score and return objective glidepath which translates supplied criteria to a constructed portfolio.
In today’s market environment, any strategic investment decision around risk diversification is a challenge because:
1) all conventional asset classes are overvalued to extremes prompted by global monetary intervention leaving little opportunity for growth-seeking portfolios 2) growth portfolios seeking returns from alternative asset classes encounter illiquidity in most 3) the resulting low and often volatile interest rate regime has exacerbated portfolio optimization through diversification.
Against this backdrop, volatility has increasingly attracted investor attention as an alternative asset class that is highly liquid and cheap. In the present market environment investor’s perception of volatility has evolved from a limited view of being a source of risk and fluctuations in asset prices and valuations, to being an asset class that is investable and may provide a long-term opportunity for monetization of a positive risk premium. Numerous strategies exist to monetize this risk premium in different contexts of market opportunity, resulting in a range of risk-return profiles ranging from conservative smart beta to more opportunistic alpha seeking ones.
Hercules In the Media
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We offer a complimentary meeting with one of our advisors to see if our financial services are the right fit for you.