NTSX or leveraged ETF balancing strategy or even SWAN to some extent—All of these are prone to losses when the interest rates rise and more prone to losses when interest rates are raising rapidly . In such scenarios bonds and equity loose together and historic negative correlations might temporarily align positively. DRSK is one interesting ETF which can be thrown into the mix similar to SWAN ,Their fixed income portion is not duration heavy compared to other tail risk strategies like SWAN and their options are actively managed
However the biggest holy grail of risk management is to find an allocation/asset which can loose very little in normal times and gain maximum during crisis irrespective of the nature of crisis. Short duration bonds can satisfy the first condition, that is loose small on normal times but they don’t gain the maximum in crisis. Long duration leveraged bonds can help with gains to certain extent but will loose when the interest rates are rapidly rising
The ones who have found the holy grail can actually leverage and make a ton of money in the market with peace. I can guess Volatility is definitely a component in this holy grail strategy , but what we are missing is how to time it.
NTSX or leveraged ETF balancing strategy or even SWAN to some extent—All of these are prone to losses when the interest rates rise and more prone to losses when interest rates are raising rapidly . In such scenarios bonds and equity loose together and historic negative correlations might temporarily align positively. DRSK is one interesting ETF which can be thrown into the mix similar to SWAN ,Their fixed income portion is not duration heavy compared to other tail risk strategies like SWAN and their options are actively managed
However the biggest holy grail of risk management is to find an allocation/asset which can loose very little in normal times and gain maximum during crisis irrespective of the nature of crisis. Short duration bonds can satisfy the first condition, that is loose small on normal times but they don’t gain the maximum in crisis. Long duration leveraged bonds can help with gains to certain extent but will loose when the interest rates are rapidly rising
The ones who have found the holy grail can actually leverage and make a ton of money in the market with peace. I can guess Volatility is definitely a component in this holy grail strategy , but what we are missing is how to time it.