SGIS has identified 5 key risks and issues facing advisers and their clients when it comes to investing.
P2strategies attempts to provide a solution to overcome these problems and helps clients reach their funding goals no matter what they are investing for (e.g. retirement).
However you access P2strategies, the theory and basic mechanics are always the same.
The initial investment is split:
Equity exposure and a number of economic factors are monitored and short futures contracts are purchased accordingly. Short futures contracts provide 2 benefits:
P2strategies uses a systematic investment process which is driven by a mathematical rule based program. The process is monitored 24 hours per day, to provide human oversight.
The program is based on the combination of two risk management techniques:
Actively producing buy or sell orders on an intra-daily basis.
As markets fall, P2strategies will reduce an investor’s equity exposure, thus minimising the impact of major market drawdowns. In rising markets P2strategies provides more equity exposure.
The key to P2strategies is that investors will see the benefits exponentially increase during periods of extreme volatility and larger market falls.
Small positive or negative market movements don’t alter equity exposure significantly as the other factors are not triggered. Adjusting for small movements could also lead to limiting upside potential. An investor may see high participation in minor losses, but participation will still be high if the market bounces back.
Source: Sanlam Global Investment Solutions, Milliman and MSCI. Data shown is for informational purposes only, does not reflect an actual account and is not the result of any actual trading. This hypothetical illustration is based on a $100,000 initial investment in the Sanlam P2strategies North America Fund in December 2004 and is net of fees. The values shown for the Sanlam P2strategies North America Fund reflect the historical returns for the MSCI North America Index with the assumption of a P2strategies overlay. It is not intended to project or predict future investment returns. Past performance is no guarantee of future returns.