Exogenous Shocks Appear Without Warning
Investors often assess the risk of a strategy by examining its past volatility. But other types of risk can lurk within their investments and environment.
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Systemic Risk is the possibility that one event could trigger cascading failures that threaten an entire system.
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Timing Risk is when a setback that is normally manageable happens at the worst moment. Such as investment losses around retirement.
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Hidden Risk is close by, but difficult to see. Financial examples include illiquidity and leverage.
Investor Suitability
- With low to medium risk profile
- Concerned about severe market corrections
- Wanting a defensive substitute for North American equity
- Own equities but could not replace losses, or nearing retirement
- Seeking access to strategies normally available to the affluent
- Pensions, endowments & foundations with funding obligations
“The superior man, when resting in safety, does not forget that danger may come. When in a state of security he does not forget the possibility of ruin. When all is orderly, he does not forget that disorder may come. Thus his person is not endangered, and his States and all their clans are preserved.”