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Is Now a Good Time to Talk About Risk-managed Equity Investing?

Just last week the stock market rally that started in March was on the verge of becoming the Greatest Rally of All Time (the S&P 500 would have needed to cross the 3,630 level to claim the title). August marked the fifth month of gains for the S&P and, on August 18, the index attained a new high, surpassing a milestone reached six months ago.

Just last week, stock market bears were being declared almost extinct, as we reported in the August 31 issue of the Calamos Weekly Alternatives Snapshot. At the start of August, the median S&P 500 stock had outstanding short interest equivalent to just 1.8% of market capitalization, the lowest level since at least 2004, according to Bloomberg citing Goldman Sachs Group data.

But then, on the last two days of last week and through Tuesday, the S&P 500 pulled back 6.93%—demonstrating yet again that’s what equities do. They can surprise and disappoint.

This most recent pullback may prove to be just another reference point in the case to be made for risk-managed equity investing. Or, it could be the sign of more to come as the third quarter ends and we begin a fourth quarter with the potential for lots of economic and politically-inspired twists and turns that could agitate investors.

Investment professionals, as you’re preparing for the final stretch of the year, please keep Calamos risk-managed equity funds Calamos Market Neutral Income Fund (CMNIX)Calamos Hedged Equity Fund (CIHEX)Calamos Phineus Long/Short Fund (CPLIX)Calamos Convertible Fund (CICVX) and Calamos Growth and Income Fund (CGIIX) in mind. While they pursue varied strategies and produce varied outcomes, each seeks to help mitigate the effect of the downside risk of equity investing (see this post for more).

Here’s a snapshot of how our funds were ready and waiting when volatility returned September 3 through September 8.

Calamos risk managed US equity funds vs sp500

For more information, investment professionals, please talk to your Calamos Investment Consultant at 888-571-2567 or caminfo@calamos.com.

Before investing carefully consider the fund’s investment objectives, risks, charges and expenses. Please see the prospectus and summary prospectus containing this and other information which can be obtained by calling 1-800-582-6959. Read it carefully before investing.

calamos convertible average annual returns and expense ratio 8-31-20

calamos growth and income average annual returns and expense ratio 8-31-20

calamos hedged equity average annual returns and expense ratio 8-31-20

calamos market neutral income average annual returns and expense ratio 8-31-20

calamos phineus long short average annual returns and expense ratio 8-31-20

calamos convertible fund average annual returns and expense ratio 6-30-20

calamos growth and income fund average annual returns and expense ratio 6-30-20

calamos hedged equity average annual returns and expense ratio 6-30-20

calamos market neutral average annual returns and expense ratio 6-30-20

calamos phineus long short average annual returns and expense ratio 6-30-20

Opinions and estimates offered constitute our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions. We believe the information provided here is reliable, but do not warrant its accuracy or completeness. This material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The views and strategies described may not be suitable for all investors. Opinions are subject to change due to changes in the market, economic conditions or changes in the legal and/or regulatory environment and may not necessarily come to pass. This information is provided for informational purposes only and should not be considered tax, legal, or investment advice. References to specific securities, asset classes and financial markets are for illustrative purposes only and are not intended to be, and should not be interpreted as, recommendations.

Performance data quoted represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted. Please refer to Important Risk Information. The principal value and return of an investment will fluctuate so that your shares, when redeemed, may be worth more or less than their original cost.

The principal risks of investing in Calamos Market Neutral Income Fund include: equity securities risk consisting of market prices declining in general, convertible securities risk consisting of the potential for a decline in value during periods of rising interest rates and the risk of the borrower to miss payments, synthetic convertible instruments risk, convertible hedging risk, covered call writing risk, options risk, short sale risk, interest rate risk, credit risk, high yield risk, liquidity risk, portfolio selection risk, and portfolio turnover risk.

The principal risks of investing in the Calamos Hedged Equity Fund include: covered call writing risk, options risk, equity securities risk, correlation risk, mid-sized company risk, interest rate risk, credit risk, liquidity risk, portfolio turnover risk, portfolio selection risk, foreign securities risk, American depository receipts, and REITs risks.

The principal risks of investing in the Calamos Convertible Fund include: convertible securities risk consisting of the potential for a decline in value during periods of rising interest rates and the risk of the borrower to miss payments, synthetic convertible instruments risk consisting of fluctuations inconsistent with a convertible security and the risk of components expiring worthless, foreign securities risk, equity securities risk, interest rate risk, credit risk, high yield risk, portfolio selection risk and liquidity risk. As a result of political or economic instability in foreign countries, there can be special risks associated with investing in foreign securities, including fluctuations in currency exchange rates, increased price volatility and difficulty obtaining information. In addition, emerging markets may present additional risk due to potential for greater economic and political instability in less developed countries.

The principal risks of investing in the Calamos Phineus Long/Short Fund include: equity securities risk consisting of market prices declining in general, short sale risk consisting of potential for unlimited losses, foreign securities risk, currency risk, geographic concentration risk, other investment companies (including ETFs) risk, derivatives risk, options risk, and leverage risk. As a result of political or economic instability in foreign countries, there can be special risks associated with investing in foreign securities, including fluctuations in currency exchange rates, increased price volatility and difficulty obtaining information. In addition, emerging markets may present additional risk due to potential for greater economic and political instability in less developed countries.

The principal risks of investing in the Calamos Growth and Income Fund include: convertible securities risk consisting of the potential for a decline in value during periods of rising interest rates and the risk of the borrower to miss payments, synthetic convertible instruments risk consisting of fluctuations inconsistent with a convertible security and the risk of components expiring worthless, equity securities risk, growth stock risk, small and mid-sized company risk, interest rate risk, credit risk, liquidity risk, high yield risk, forward foreign currency contract risk and portfolio selection risk.

The S&P 500 Index is generally considered representative of the U.S. stock market.

Bloomberg Barclays U.S. Aggregate Bond Index is a broad-based flagship benchmark that measures the investment grade, US dollar-denominated, fixed-rate taxable bond market. The index includes Treasuries, government related and corporate securities, MBS (agency fixed-rate and hybrid ARM pass-throughs), ABS and CMBS (agency and non-agency).

The Bloomberg Barclays U.S. Government/Credit Bond Index includes treasuries and agencies that represent the government portion of the index, and includes publicly issued U.S. corporate and foreign debentures and secured notes that meet specified maturity, liquidity, and quality requirements to represent credit interests.

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