Recognizing that risk-based investing could be attractive to advisors and clients in these still-volatile times, The MDE Group has introduced a “comprehensive portfolio solution” called Risk 3.0.
To implement the Risk 3.0 portfolio, the firm uses two strategies in separately managed accounts (SMAs) that have a risk-based approach. The two strategies are called Planned Return Strategy and Third Rail Strategy, according to Wednesday’s announcement.
The firm’s website notes that Risk 3.0 is intended to provide “superior risk-adjusted returns in the current challenging environment” with capital preservation in small market declines; “minimal declines” in periods of “moderate market losses;” and “avoiding the majority of steep market losses.”
The MDE Group’s Founder and CEO, Mitchell Eichen, stated in the release, “Our approach replaces all or most long-only equity exposure with a set of planned returns that substantially reduce those areas of market loss we believe are most probable, while simultaneously multiplying and expanding the most probable areas of market gains.”
According to the website, the Planned Return Strategy should give investors a boost in returns when the market is up in single digits, but less than the market’s return when the market soars, with an upside “cap” illustrated at 12% on the website, and “downside protection” that limits losses when the markets experience a severe drop.
The Third Rail Strategy provides market beta up to a “cap” illustrated at 15% on the website, with a lower level of losses when the markets have a severe downturn.
“The goal of the Risk 3.0 portfolio is to preserve capital against small market losses, suffer minimal declines during moderate market losses, and avoid the majority of steep market losses,” Dr. John Longo, chairman of The MDE Group’s Investment Committee said in the announcement. “We also expect to enhance weak market gains, keep pace with high single-digit market gains, and participate (albeit at reduced levels) in double-digit market gains.”