IPS 2024 Post-Election Outlook
- Dominick Paoloni
- November 6, 2024
- 1:49 pm
In the wake of the 2024 election, emotions are naturally heightened. Some people feel joy, others sorrow; some are filled with hope, and others with fear. These responses are understandable, as people consider the potential impact on their families, futures, and the country. As a financial advisor, I have the privilege of hearing diverse perspectives across the political spectrum. I also see firsthand how these emotions can influence investment decisions. However, my duty as a fiduciary is to remain objective and act in my clients’ best interests. Here are some reflections.
Historically, elections have not had lasting effects on market performance. From 1947 to 2022, the U.S. real GDP has shown steady growth, and the broad market has generally trended upward, regardless of whether the government has been Republican, Democratic, or divided.
Figure 1: GDP and Market Performance Across Political Regimes
For investors, this emphasizes the importance of staying invested to allow their assets to grow over time. But what about potential risks?
At IPS Strategic Capital, we advocate for defined-risk investing, a strategy that allows clients to remain invested while actively managing downside exposure. In our IPS Absolute Return Fund, for example, we implement hedging strategies to achieve asymmetric returns. Leading up to the 2024 election, we structured the portfolio to capture approximately 85% of potential market gains while limiting exposure to only 50% of potential losses. This strategy uses portfolio hedges, enabling us to manage risk without attempting to time the market.
Beyond our fund, we offer zero-risk structures that provide a defined risk-return profile.
Figure 2: IPS Fully Protected Structure
With this structure, clients can participate in 80% of market gains with no downside risk. This approach is appealing to both perspectives: for those concerned about potential declines, their principal remains protected, and for those optimistic about market growth, it allows uncapped participation in gains.
In conclusion, the 2024 election has certainly stirred strong emotions. IPS offers a trusted solution for balancing risk and return, bringing peace of mind in uncertain times. Our investment approach is employed by only a select group of managers, mainly at the institutional level for pensions and endowments. I am proud that IPS Strategic Capital provides this level of expertise to individual clients.
To learn more about our zero-risk investment options and IPS structures, please reach out at
303-697-3174
or email
Mallory@investps.com.
