Archived material may contain dated performance, risk and other information. Current performance may be lower or higher than the performance quoted in the archived material. For the most recent month-end fund performance information visit www.calamos.com. Archived material may contain dated opinions and estimates based on our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions at the time of publishing. We believed the information provided here was 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. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

Performance data quoted represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted. 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. Performance reflected at NAV does not include the Fund’s maximum front-end sales load. Had it been included, the Fund’s return would have been lower.

Archived on July 17, 2019

How We Navigated Election Night Turmoil

Alternative Team Perspectives by David O’Donohue

In our market neutral approach, the work of hedging around a major event begins days, weeks or even months before. Our end goal is to be confident in our positioning heading into an event and ready for market changes as the event unfolds.

Often it’s the groundwork laid weeks and months earlier that positions us to take advantage of abnormal market conditions that can occur before and during a major event. It can be difficult to establish a hedge right before an event, so while our primary focus is on managing our current hedge, we are also keeping an eye on our “event hedge.”

The U.S. presidential election provides a case in point of how this approach comes together. We began focusing our attention on potential election outcomes shortly after Brexit. As we discussed in our review of how we invested through Brexit, we are guided by these principles:

  1. Take advantage of opportunities the market presents. During the months before the election, we used the market’s ebbs and flows to add pieces to our hedge. When the market fell, we added to our upside scenarios and conversely, during rallies, we added to our downside hedges. In essence, we are like many shoppers: buying items when they are out of season and on sale instead of when they are in demand and expensive.
  2. Focus on being advantageously positioned for as many outcomes as possible. We believe in being prepared for as many outcomes as possible—not just the predicted one.

Just as the referendum in favor of Brexit caught many by surprise, market participants were generally positioned for Clinton victory on the morning of election Tuesday. However, as we know, global markets became more volatile as the day wore on and into the early hours of Wednesday morning.

However, we had prepared for this possibility and were ready to act. As S&P 500 futures plummeted in after-hours trading, we remained active, supported by our trading desk in London. Our hedge allowed us to manage from a position of strength and take advantage of the dislocations that occurred before U.S. markets re-opened on Wednesday morning—while maintaining confidence that we could protect capital if the fall continued.


    Past performance is no guarantee of future results. The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice.

    The S&P 500 Index is considered generally representative of the U.S. stock market. Indexes are unmanaged, do not entail fees or expenses and are not available for direct investment. S&P 500 futures are a contract that gives the buyer the right to a predetermined selection of stocks at a predetermined future date listed on the S&P 500 Index.

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    Archived material may contain dated performance, risk and other information. Current performance may be lower or higher than the performance quoted in the archived material. For the most recent month-end performance information, please CLICK HERE. Archived material may contain dated opinions and estimates based on our judgment and are subject to change without notice, as are statements of financial market trends, which are based on current market conditions at the time of publishing. We believed the information provided here was 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. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, accounting, legal or tax advice. References to future returns are not promises or even estimates of actual returns a client portfolio may achieve. Any forecasts contained herein are for illustrative purposes only and are not to be relied upon as advice or interpreted as a recommendation.

    Performance data quoted represents past performance, which is no guarantee of future results. Current performance may be lower or higher than the performance quoted. 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. Performance reflected at NAV does not include the Fund’s maximum front-end sales load. Had it been included, the Fund’s return would have been lower. For the most recent month-end fund performance information visit www.calamos.com.