One of the main reasons we moved to Q Wealth Partners (“QWealth”) four years ago was that they offered our clients a significantly better platform for investing. As Portfolio Managers at Q Wealth,Andrew, Rob and I had the opportunity to manage Q Wealth’s pooled funds which resulted in greater fairness and efficiencies – and allowed us to use options to reduce volatility and manage risk.

The options we used in the pools helped significantly in 2022. Unfortunately, this year has been particularly difficult for investment markets. In hindsight, it would have been better if we had bought even more.

What are options and how do we use them?

One of our core beliefs is that equity markets move higher over time. Investors will experience volatility and corrections, but equities should provide them with a good long-term return … if they remain invested.

There are many ways to employ options. The Q Wealth Portfolio Management team looks almost exclusively for the ones that help us to dampen market fluctuations.It’s like having a type of “portfolio insurance.” We search for strategies where values should rise when markets drop, allowing us to keep more of the portfolio fully invested for the long-term, while reducing some of the volatility along the way.

There is a cost to owning options like these: they should dampen volatility, but they can also reduce returns. We must continually determine the extent of our exposure for a wide range of client needs. For conservative investors, it’s money well spent. However, growth-focused investors that aren’t concerned with volatility may not feel they are necessary.

Our investment process continues to evolve

Our biggest accomplishment in 2022 is that we developed a vision that can address the needs of both conservative and growth investors. Q Wealth created a second series of the QW Elevate Enhanced Global Equity Fund – one will be hedged and the other will be unhedged. This will allow us to use the new hedged series for more conservative investors who want good growth with less volatility, and the original series for investors who are less concerned about short term volatility and want higher long-term growth.

We are excited by this solution and believe it will add protection and peace of mind for those who want it most.

Mike Holden, Andrew Chowne and Rob Parrish

Portfolio Managers, Q Wealth

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