I manage over $90 million in client assets. A major part of our risk management strategy is to buy up to 35% in inverse funds on the rare occasions the technicals are very bad. This only happens once every few years. We use a 10% stop, so our clients have a 3.5% risk (10% of 35%) to make gains/hedge when the markets make major corrections. This is explained to our clients initially, and at every portfolio review meeting. Taking away this ability would expose my clients to greater risk, not less. Sophisticated or not, high net worth or not, all of these clients trust us to use this strategy to help protect their assets. Restricting the use of inverse funds will harm the very people who need help most.
Please consider at least allowing those individuals who use a professional to manage their money to be able to continue to do so without having to go through testing or having a high net worth. If not, many individuals will lose a valuable risk mitigation tool.
Ned Hodder Comment On Regulatory Notice 22-08
I manage over $90 million in client assets. A major part of our risk management strategy is to buy up to 35% in inverse funds on the rare occasions the technicals are very bad. This only happens once every few years. We use a 10% stop, so our clients have a 3.5% risk (10% of 35%) to make gains/hedge when the markets make major corrections. This is explained to our clients initially, and at every portfolio review meeting. Taking away this ability would expose my clients to greater risk, not less. Sophisticated or not, high net worth or not, all of these clients trust us to use this strategy to help protect their assets. Restricting the use of inverse funds will harm the very people who need help most.
Please consider at least allowing those individuals who use a professional to manage their money to be able to continue to do so without having to go through testing or having a high net worth. If not, many individuals will lose a valuable risk mitigation tool.