For Investors Especially Concerned About Portfolio Volatility and Short-Term Losses.
Working with each client, JIC will develop a mutually-agreeable downside risk target. This target is the potential loss a client is willing to accept during a year. Johnston Investment Counsel structures a portfolio, with a combination of exchange traded funds, individual stocks, and options that seeks to limit portfolio losses to the pre-defined level.
However, providing downside protection can be quite expensive. JIC spends significant time and effort in trying to minimize this cost while maintaining as much upside return as possible. But, in very strong up markets, it is likely that this strategy will lag the return of a stock index While not a requirement, this strategy is best implemented in tax-deferred accounts.