It’s long been understood by psychologists and behavioral finance experts that investors attach more value to avoiding large losses than to making gains of a similar amount. While loss aversion can be rational for your participants - the goal for many is capital growth with downside protection - equities still need to be an option in their financial toolbox.
This paper looks at how adaptive volatility strategies attempt to address the challenge of participating in equity markets while also reducing volatility. In it, we demonstrate how the asymmetric return profile of adaptive volatility strategies offers your participants benefits across the investment lifecycle: the accumulation phase, the “retirement red zone”, and the decumulation phase.
