At Heritage Capital Research, managing the risks of the markets is "mission critical" as we believe no investor would choose to intentionally remain fully invested in the stock market during severe bear market declines.

But before embracing a risk managed approach in one's portfolio, it is important to recognize that risk management strategies are part of a properly diversified portfolio. In other words, risk management is but one investing methodology and we believe that a portfolio should be made up of multiple methodologies, strategies, and managers.

It is also important to have the proper expectations when adding risk management strategies to a portfolio. Below are our views on the subject:

The idea of risk management is simple enough. Be invested in stocks during bull market environments and then move to cash during those nasty bear market cycles. 

While nice in theory, in reality, such a goal is virtually impossible to implement - on a consistent basis. Every bull market is different. And the next bear market usually doesn't look anything like the last one. Therefore, one must understand that the overriding goal of a risk managed approach is to try and capture as much of the gains during bull cycles as possible and then to lose as little as possible when the bears come to call. 

In short, the objective is to get it mostly right, most of the time.

What Risk Management CAN Do:

  • Reduce exposure to market risk during negative environments

  • Strive to “lose the least amount possible” during bear markets

  • Get it “mostly right, most of the time” during really big, really important moves

What Risk Management CANNOT Do:

  • Sell at the top and buy at the bottom of market cycle (this is a fool's errand)

  • Protect against ALL losses during negative markets

  • Avoid all/every bear market declines

  • Protect against losses during normal market “corrections” 

In reality, over a span of five bear market cycles, we should probably expect to "get it right" and "lose less" three or four times. Thus, it is important to recognize that we won't get it right, every single time. However, possibly avoiding significant losses 3 times out of 5 certainly beats the alternative.

Our belief is that with the proper expectations, risk management can add significant value to a portfolio - especially during negative market environments.

Risk Managed Offerings:

Heritage offers the following portfolios designed to manage risk:

  • Strategic Global Core
  • Strategic Global Growth & Income
  • Strategic Global Growth
  • Equity Leaders
  • Tactical Income
  • Tactical Conservative
  • Tactical Growth
  • Tactical Aggressive
  • Alternative Income
  • Alternative Balanced
  • Alternative Growth

Have Questions?  Contact Heritage or give us a call at (630) 250-4700