Philosophy

At Gateway, we believe that:

  • The equity market is the most reliable source of long-term real returns
  • Because the long-term is a series of short terms, equities do not become less risky over the long-term
  • Broad equity market exposure plus the volatility premium associated with index options can reduce downside risk while improving risk-adjusted returns from equity exposure
  • Because each market environment presents a unique combination of opportunities and risks, decision making based on vigilant application of judgment and experience is more reliable than quantitative triggers or rigid rules-based approaches

Why Index Options?

  • Equity risk premium exposure - a reliable source of long-term real returns
  • Volatility risk premium exposure - a reliable source of potential alpha
  • European-style expiration - maintains control of options portfolio
  • Cash-settled - maintains control of underlying equity portfolio
  • Exchange-traded - avoids counterparty risk
  • Robust liquidity - minimizes illiquidity risks
  • Deep, competitive market - enables low transaction costs
  • For taxable accounts - facilitates loss harvesting and tax efficient returns

To read the case for an index approach to low-volatility equity, please click here - The Journal of Investing: Option-Writing Strategies in a Low-Volatility Framework