A Mantis Research Paper
As ‘black swan’ sightings become increasingly common, tail-hedging strategies, which are designed to protect portfolios during extreme market downturns, are drawing renewed attention from investors seeking resilience in uncertain markets.
In light of current market conditions, marked by high valuations, a relatively low VIX and escalating geopolitical tensions, we hope the attached paper, “If it looks like a black swan and swims like a black swan”, provides a timely analysis of the tail hedging strategy.
Specifically, we examine:
- The key methods to implement a tail-hedging strategy, and
- Tail hedging as a long-term wealth-building tool.
- Protecting against catastrophic losses.
- Providing liquidity to buy the dips.
- Managing retirees sequencing risk, and
- Countering the behavioural bias of investors who habitually under allocate to risk assets.