Swan Wealth Advisors
Defined Risk Strategy

The Defined Risk Strategy


Defined Risk Strategy *****Five Star Morningstar Rating
   
Swan Wealth Advisors Inc. is a registered investment advisor that specializes in an index-based strategy that allows investors to participate in the upward price movement of the index while reducing most of the downside risk.

The DRS strategy is an absolute return, market-neutral strategy that does not rely on market timing or stock selection.  The primary goal of the DRS is to grow your wealth while protecting capital. In this respect, DRS seeks to maximize returns and minimize losses in all three types of market conditions (bull, bear and flat market cycles)

 By utilizing a hedged equity strategy that mathematically minimizes large losses in your portfolio in combination with a proprietary monthly option income strategy, the returns over 14.75 years are well above the market average and are in the Top 1% of comparable managers over that time period.  

The Swan Defined Risk Strategy (DRS) can give you peace of mind in these turbulent times. Swan was founded in 1997 by Randy Swan, CPA to provide downside protection to investment portfolios.  Swan provides superior risk adjusted returns to investors via the DRS' hedging and income generating techniques. 

              We accept new clients through investment advisory firms only. Please ask you investment advisor about us, today!

                                                         "Because traditional asset allocation is not enough..."





DRS Data Sheet



What happened to your portfolios in 2008?:  What are you doing about it?
Swan Wealth Advisors, Inc. doesn’t believe that anyone can predict the market over the long run.  Are you willing to continue to use or recommend strategies which did not prevent recent large losses in portfolio values? Swan's DRS gives you an alternative.  The DRS seeks market neutral performance with dedicated components designed to profit in Up, Flat, and Choppy markets. 

Most important, however, are its features designed to minimize and limit both unsystematic and systematic risk.  Unsystematic risk is minimized by diversification of component strategies, markets, and investment time-horizons.  Systematic risk is minimized and defined by hedging.   Oliver Wendell Holmes said it best, “Prophesy as much as you like but always hedge”.

Market Outlook:  Is your portfolio protected?
Things do not seem to be getting better for most Americans. We think the economic and market "pressure" is building. The United States government has artificially propped up the markets. Financial instruments (dominoes) are teetering on the edge. Investors need to prepare for the worst case scenario.

When the last of the dominoes (Government bonds) fall, 2008 may look good in comparison! We may even be in danger of a repeat of the 1929-1932 bear market crash in which the Dow fell 89%. Nobody knows what will happen in this scenario.  Hoping for economic and market recovery is not good enough. Asset Allocation has demonstrated its ineffectiveness to protect against significant losses.

A new paradigm is upon us with more turbulent markets. Advisers and investors must adopt proven risk reduction strategies. The good news is that since it has been proven that stock investments can be protected on the downside, a higher allocation to stocks can and probably should be made to increase overall portfolio returns. Diversifying into bonds or increasing your portfolio's allocation to bonds is not the answer since bond defaults on corporate and/or municipal debt are real possibilities. Interest rates are at historic lows and have nowhere to go but up. As rates rise, bond values fall. Your 2% bond is not worth as much if new bonds are paying 4%. Real estate may not have even bottomed yet. And cash, well, cash is paying virtually nothing. After taxes and inflation, bonds and cash give you a negative return.

Relying on traditional asset allocation techniques which are not able to protect against market risk will yield the same or worse results as shown in 2002 and 2008. If you prepare, you can protect your investments. The old adage "better safe than sorry" could not be more apropos. Find a manager who will manage market risk in your investment portfolio. You have investment options.

What are you doing about it?

Defined Risk Strategy:  Swan Wealth Advisors, Inc. is a registered investment advisor that specializes in index-based strategies that  may allow investors to participate in the upward price movement in a particular stock index while attempting to reduce most of the downside risk.  The Defined Risk strategy focuses on delivering defined risk strategies that allow our clients to grow wealth while protecting capital.  Swan claims compliance with the Global Investment Performance Standards (GIPS®).  To receive a complete list and description of Swan’s composites and/or a presentation that adheres to the GIPS standards, contact Jim Pritchard, 970 382 8901 or write Swan Wealth Advisors, Inc. 277 E 3rd Ave, Suite A, Durango, CO 81301


Performance Details: click here


Swan Wealth Advisors, Inc.:  Mission & Investment Philosophy
Swan Wealth Advisors, Inc. is a registered investment advisor that specializes in index-based strategies that seek to allow investors to participate in upward price movement in a particular stock index while attempting to reduce most of the downside risk.

Swan Wealth Advisors was founded in 1997 by Randall W. Swan, CPA to provide investment management services not available to most investors.  Specifically, Swan provides superior risk adjusted returns to investors via various hedging and income generating techniques.

Swan's focus is to first protect and second accumulate wealth for its clients.  To do that, Swan is seeks to follow two core principles.
  1. Never lose money
  2. Don't forget rule # 1

To meet these goals, Swan delivers superior customer service through defined risk strategies that allow our clients to grow wealth while protecting capital.

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Asset Allocation:  Asset allocation is not enough.  It works until it doesn't.
"The great claim of asset allocation is that risk can be adequately reduced by diversifying over several broad asset classes (i.e. stocks, bonds, cash and real estate) without a significant reduction in returns.  This risk reduction is, however, strictly theoretical (typically based upon relationships that existed over a particular period with no guarantee that these same relationships will continue in the future). This is the crux of where asset allocation (modern portfolio theory) breaks down. Risk is not defined; instead it is merely expressed in historical standards." (Randy Swan, 1997) 

There are several significant problems with Modern Portfolio theory as a primary investment strategy.
  1. There is no guarantee that historical patterns will continue in the future
  2. Different asset classes do not always move in opposite directions
  3. Asset allocation, by definition, does not provide protection from systematic risk (i.e. inherent market risk)
  4. Risk is not adequately defined or limited; instead it is merely expressed in historical standards
  5. Overall returns are significantly reduced in bull markets due to little or no appreciation in fixed income securities 

Swan’s unique and proprietary "Defined Risk Strategy" (DRS) was developed to address the primary flaws of Asset Allocation while maximizing returns in the broadest range of market conditions.

More Information: click here