Hedging your portfolio! What’s that? May well seem Greek and Hebrew to someone from a non-finance background. But hey, portfolios contain multiple investments and when you talk of hedging, you obviously mean protecting. But how? Don’t investments always have an element of risk attached to them? Well portfolio hedging is about minimizing, yet not eliminating such risks altogether.
How It Works
Let’s say an investment portfolio has two contrasting funds. One is offering good returns and the other is struggling to meet investors’ expectations. So, what should you do? How about countering the possible losses generated by ‘x’ number of units of one fund by purchasing exactly the same number of units in the other that is witnessing an upswing. This is what seasoned finance experts such as Clear Capital Markets would recommend.
Because finance professionals are attuned to the fluctuations in the world of money that can cause currency rate, interest rate, price, etc. to go up or down mildly or wildly, seeking their assistance is advisable.
Why Portfolio Hedging Matters
As you seek expert guidance, you will discover that portfolio hedging is primarily meant for investors who do not like to sit on their investments and will be affected by short-term losses. Hedging can curtail profits too, thus underlining the need to let it remain the prerogative of experts. It will not be wrong to equate hedging with insurance as both serve the same purpose.
Contact Clear Capital Markets and we will familiarize you with terms used in the context of portfolio hedging viz. derivatives, options, future, etc. Hedging aside, Clear Capital Markets can guide you in all finance-related products and services.
Meanwhile, Clear Capital Markets has gone ahead and released an exclusive report on Portfolio Hedging named ‘Hedging Your Portfolio in Uncertain Times’ that will apprise you of the investment theories behind hedging strategies with detailed explanations and illustrations. To download the report, click the link below:
Risk Warning: The value of shares can fall as well as rise; you may not necessarily get back the amount you invested. Past performance is no guarantee of future performance. Clear Capital Markets Limited is authorised and regulated by the Financial Conduct Authority FRN 706689.
This blog post is written by Daniel Pellard, Director at Clear Capital Markets, Senior finance professional with 10+ years experience in a front office environment.
Chartered MCSI, FCA CF30 Registered, Fully RDR Compliant (Valid SPS)
Areas of expertise:
wealth management, portfolio management, HNW private and professional client relationship management, long/short and hedging strategies, risk management, equities, cfds, options, private equity.