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