Stay Hedged Stay Invested
The IPS Bear Strategy is designed to be used as an overlay on top of a portfolio which, based on detailed regression analysis using an ex-post data framework, has shown to cut off a significant portion of downside tail risk. This means that, rather than allocating a significant portion of their portfolio to an unreliable hedge using debt, investors can be far more aggressive, achieving an effective hedge by allocating as little as 5% to our overlay.
The blue line on this graph illustrates how well the Bear Strategy would have performed during market crashes. The strategy has shown to deliver a downside Beta of -1.74 and an upside Beta of -0.30. This means that on average when the market is down -10%, the overlay will be up +17%, and when the market is up 10%, the strategy will be down -3%. This rules-based overlay should deliver structural alpha when added to a portfolio framework.