We Need a New Arrow in our Asset Allocation Quiver

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We Need a New Arrow in our Asset Allocation Quiver

QS RESEARCH GROUP

MARCH 01, 2018

Defensive Equity Income: a Solution for Investors Lost in this Bull Market

   After nine years, investors feel lost in this bull market… With volatility back to normal and real concerns about retirement shortfall amid a low economic growth environment, investors feel they cannot afford to reduce their exposure to equities but equity markets make them nervous…


 Defensive equity income may be just what these investors are looking for, as it allows them to stay invested in equities and may offer more income and potentially less downside than traditional market-cap equity allocations.


   Defensive equity income can replace traditional equity allocations in an outcome-oriented portfolio or help diversify the value sleeve within a traditional style box framework.


 Lost in a Bull Market

  

Should I Stay or Should I go? If I Stay There Will Be Trouble. 

  • Less Return, More Risk??
  • What happens when volatility returns to normal levels?

 
Source: Bloomberg, S&P 500 Index

If I Go it Will Cost Me Double

  • Retirement shortfall is a growing concern for investors
  • How will you position your clients to reduce their retirement gap?

 
Source: ERBI survey was conducted from January 6, 2017 – January 13, 2017 through online interviews with 1,671 individuals (1,082 workers and 582 retirees) ages 25 and older in the United States

Lower GDP Growth When you Need it Most

  • GDP Growth in the US has decreased in recent years which could affect equity returns

 
Source: US Bureau of Economic Analysis


Defensive Equity Income


 How to Deploy in a Portfolio

Outcome-oriented portfolio construction

  • Increase expected return through greater equity exposure with less risk to reduce shortfall
  • Reduce risk while preserving return expectations

Incorporating into a traditional style box construct

  • Diversify the value sleeve to enhance traditional investing styles

Important Information
This material was prepared without regard to the specific objectives, financial situation or needs of any particular person who may receive it. It is intended for informational purposes only and it is not intended that it be relied on to make any investment decision. It does not constitute investment advice or a recommendation or an offer or solicitation and is not the basis for any contract to purchase or sell any security or other instrument, or for QS Investors to enter into or arrange any type of transaction as a consequence of any information contained herein. QS Investors does not give any warranty as to the accuracy, reliability or completeness of information which is contained in this document. Except insofar as liability under any statute cannot be excluded, no member of QS Investors, or any officer, employee or associate accepts any liability (whether arising in contract, in tort or negligence or otherwise) for any error or omission in this document or for any resulting loss or damage whether direct, indirect, consequential or otherwise suffered by the recipient of this document or any other person.
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Past performance or any prediction or forecast is not indicative of future results. No representation or warranty is made as to the efficacy of any particular strategy or the actual returns that may be achieved. The value of shares/units and their derived income may fall as well as rise.  An investment is not a deposit and is not ensured by the Federal Deposit Insurance Corporation or any other government agency or by QS Investors or any of its affiliates, and is subject to risks, including possible loss of principal amount invested. 
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