It’s always good to buy insurance before you need it, as some investors might be realizing these days.
“It’s probably still worth having some hedges on, but clearly the premium that you pay on those hedges are going to eat into your returns a fair bit more now than they would have six months ago.” The product provides downside protection through the use of option-hedging strategies that would otherwise be a little too advanced for average investors, though it comes at the cost of some of the upside as well.
“It’s just another tool in your kit so that you can have some downside protection. You’re cognizant of it, and then, you know, maybe you add a little bit more risk in different investments.” Rosenberg said some have stayed away from fixed income over concerns inflation could come back, which would eat into returns, but he said that fear is misplaced.