Watch: CIHEX’s Dynamic Approach to Pursuing Market Opportunities
April 11, 2019
Equities have a natural drift to the upside, but at all times are vulnerable to downside risk that comes in the form of shocks and pullbacks. In this Q&A video series you’ll learn from Joe Cusick, Vice President, Portfolio Specialist, about how the portfolio management team of Calamos Hedged Equity Fund (CIHEX) seeks to take advantage of market gains while potentially protecting against the downside.
What explains the recent popularity of options-based funds?
Cusick addresses “a growing need for investors to use more transparent liquid vehicles that genuinely deliver reduction of portfolio risk as well as volatility risk.” The video below explores why options-based funds are attracting the attention of more financial advisors and their clients (and see our infographic on the category).
How does Calamos Hedged Equity Fund differ from its peers?
Below, Cusick comments on the two essential traits—a long core portfolio blended with actively managed options strategies—that make CIHEX stand apart from its peers in the options-based fund category. Managers of funds who use more mechanical position management (i.e., set and forget) are less able to take advantage of selling expensive volatility and buying cheap volatility.
Why does Calamos Hedged Equity Fund favor dynamic vs. mechanical management?
“In options pricing, there’s something embedded in the price of that option. It’s called implied volatility,” observes Cusick in the video below, explaining how the CIHEX team analyzes price to “buy options when they’re potentially inexpensive and sell options when they’re expensive.”
Where does Calamos Hedged Equity Fund fit in a portfolio?
Where does it fit? According to Cusick, CIHEX should be part of the discussion when financial advisors are looking for “less volatility, shallow drawdowns and quicker rebounds after pullbacks.” Below, he defines the role the fund can play in a client's portfolio.
As a risk management tool, what does Calamos Hedged Equity Fund replace?
“Where the long core bullish portfolio holder is utilizing traditional products to diversify their overall portfolio risk, we at Calamos will use listed option strategies,” says Cusick, describing the fund’s capabilities as a risk management tool.
Please explain the baseline North Star trade.
Below, Cusick talks about the meaning of the “North Star trade” and how the portfolio management team “likes to look up and to the right on the portfolio profit and loss chart.”
To learn more about CIHEX, talk to your Calamos Investment Consultant at 888-571-2567 or [email protected].
Calamos is the fourth largest alternatives manager by assets under management (Morningstar data, 3/31/19) and #1 in alternative flows for 2018 (Morningstar data, 12/31/18).
Videos recorded 03/21/19.
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. 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.
Active management does not guarantee investment returns or eliminate the risk of loss. It should not be assumed that any securities mentioned in this recording will be profitable or experience equal performance in the future.
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