Thursday, May 12, 2016

Hedging A Portfolio: An Option You Could Consider

Protecting a portfolio during uncertain market conditions is always of interest for an investor, but what type of strategy could be considered to save it? Should someone jump on the hot trends in the market? Should they panic and just sell everything? What strategy could they consider to hedge their portfolio? Well, it is a fact that everyone has a different investment strategy but Zack Shepard of Matson Money shared his strategy about hedging a portfolio on a recent appearance on After The Bell, which airs on the Fox Business Channel.

Shepard's take on the topic stems from his work with Mark Matson who reviews strategies that will fall in line for the goals his own team sets, so it needs to be understood that past performance is not a guarantee of future results. At any rate, Shepard begins to explain that if someone wants to hedge their stock bets, as an alternative of investing in a hedge fund, that may want to contemplate the idea of hedging with short-term, high-quality fixed income instead. He continues to state that making bets on long-term maturities and fixed income may not be the greatest idea because investors can feel the negative effect of interest rates when they begin to change, which generates the possibility of losing money.

Shepard goes on to explain his strategy that involves staying globally diversified in over 12,000 companies around the world. This type of strategy allows him to hedge his investments intrinsically. Additionally, Shepard can then rebalance portfolios during market lows and highs. This investment principle is one of the key strategy plans Shepard and his team at Matson Money use while avoiding the chase of hot and trending picks of the market.

His strategy of maintaining a balanced portfolio during uncertain times in the market is a form of hedging a portfolio because no one can predict where the market will go, it is futile. At any rate, Shepard and the Matson Money team believe that investors with globally diversified portfolios have the chance to rebalance in the event a particular market declines.