Equity exposure with bond-like volatility
Pioneered in 1988, Gateway's flagship strategy is a low-volatility equity strategy that combines a broadly diversified portfolio of common stocks with an actively managed portfolio of written index call and purchased index put options. Selling index call options1 and buying index put options2 helps protect the overall value of the stock portfolio by generating option premium cashflow and limiting losses caused by sharp market declines over a short period of time.
The strategy capitalizes on the implied volatility versus realized volatility relationship, and reduces equity volatility in a robust, repeatable way. Consistent and attractive cashflow from this index option strategy creates potential for portfolio returns in excess of those available from other investments comparable in volatility.
Low-Volatility Equity Profile
The flagship strategy has consistently exhibited characteristics of high equity correlation combined with reduced beta and standard deviation, which can provide downside protection and the potential to capture a majority of the equity market's return over a full cycle.
Periods over 1 year are annualized
*The Gateway Index/RA Composite has an inception date of January 1, 1988
** Based on monthly performance
†The Composite was created in January 1993. Prior to January 1, 1993, not all fully discretionary portfolios were represented in composites.
Results shown for 1988 through 1992 are those of one representative account.
Datasource: Morningstar Direct™
Past performance does not guarantee or indicate future results.
The flagship strategy is multi-faceted with the flexibility to support many applications. Within a portfolio, the flagship strategy can act as:
- A core equity strategy
- A complement to a fixed income portfolio
- A component to an alternative program
Flagship IndexRA Factsheet
Flagship Index/RA Commentary Q2 2018
To read about 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
1 Selling index call options can reduce the risk of owning stocks, but it limits the opportunity to profit from an increase in the market value of stocks in exchange for up-front cash at the time of selling the call option.
2 From time to time, the strategy may reduce its holdings of put options, resulting in an increased exposure to a market decline.
Gateway Index/RA Composite performance shown in this illustration is an asset-weighted composite of discretionary accounts under Gateway's management which share the same investment objectives and hedging strategies. The composite was created in January 1993. Prior to January 1, 1993, not all fully discretionary portfolios were represented in composites. Results shown for 1988 through 1992 are those of one representative account.
Gateway Index/RA Composite performance reflects the deduction of investment advisory fees and the reinvestment of dividends and other earning. A more detailed description of Gateway's fees is included in Form ADV, Part 2. Past performance is no guarantee of future results. Annual Disclosure Presentation. Terms to know.
S&P 500 Disclosure
The “S&P 500” is a product of S&P Dow Jones Indices LLC or its affiliates (“SPDJI”), and has been licensed for use by Gateway Investment Advisers, LLC (Gateway). Standard & Poor’s® and S&P® are registered trademarks of Standard & Poor’s Financial Services LLC (“S&P”) and Dow Jones® is a registered trademark of Dow Jones Trademark Holdings LLC (“Dow Jones”). The trademarks have been licensed to SPDJI and have been sublicensed for use for certain purposes by Gateway. Gateway Index/RA composite is not sponsored, endorsed, sold or promoted by SPDJI, Dow Jones, S&P, any of their respective affiliates (collectively, “S&P Dow Jones Indices”). S&P Dow Jones Indices does not make any representation or warranty, express or implied, to the owners of the Gateway Index/RA Composite or any member of the public regarding the advisability of investing in securities generally or in the Gateway Index/RA Composite particularly or the ability of the S&P 500 Index to track general market performance. S&P Dow Jones Indices’ only relationship to Gateway with respect to the S&P 500 Index is the licensing of the Index and certain trademarks, service marks and/or trade names of S&P Dow Jones Indices and/or its licensors. The S&P 500 Index is determined, composed and calculated by S&P Dow Jones Indices without regard to Gateway or the Gateway Index/RA Composite. S&P Dow Jones Indices has no obligation to take the needs of Gateway or the owners of the Gateway Index/RA Composite into consideration in determining, composing or calculating the S&P 500 Index. S&P Dow Jones Indices is not responsible for and has not participated in the determination of the prices, and amount of the Gateway Index/RA Composite or the timing of the issuance or sale of the Gateway Index/RA Composite or in the determination or calculation of the equation by which the Gateway Index/RA Composite is to be converted into cash, surrendered or redeemed, as the case may be. S&P Dow Jones Indices has no obligation or liability in connection with the administration, marketing or trading of the Gateway Index/RA Composite. There is no assurance that investment products based on the S&P 500 Index will accurately track index performance or provide positive investment returns. S&P Dow Jones Indices LLC is not an investment advisor. Inclusion of a security within an index is not a recommendation by S&P Dow Jones Indices to buy, sell, or hold such security, nor is it considered to be investment advice.
S&P DOW JONES INDICES DOES NOT GUARANTEE THE ADEQUACY, ACCURACY, TIMELINESS AND/OR THE COMPLETENESS OF THE S&P 500 INDEX OR ANY DATA RELATED THERETO OR ANY COMMUNICATION, INCLUDING BUT NOT LIMITED TO, ORAL OR WRITTEN COMMUNICATION (INCLUDING ELECTRONIC COMMUNICATIONS) WITH RESPECT THERETO. S&P DOW JONES INDICES SHALL NOT BE SUBJECT TO ANY DAMAGES OR LIABILITY FOR ANY ERRORS, OMISSIONS, OR DELAYS THEREIN. S&P DOW JONES INDICES MAKES NO EXPRESS OR IMPLIED WARRANTIES, AND EXPRESSLY DISCLAIMS ALL WARRANTIES, OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE OR USE OR AS TO RESULTS TO BE OBTAINED BY GATEWAY, OWNERS OF THE GATEWAY INDEX/RA COMPOSITE, OR ANY OTHER PERSON OR ENTITY FROM THE USE OF THE S&P 500 INDEX OR WITH RESPECT TO ANY DATA RELATED THERETO. WITHOUT LIMITING ANY OF THE FOREGOING, IN NO EVENT WHATSOEVER SHALL S&P DOW JONES INDICES BE LIABLE FOR ANY INDIRECT, SPECIAL, INCIDENTAL, PUNITIVE, OR CONSEQUENTIAL DAMAGES INCLUDING BUT NOT LIMITED TO, LOSS OF PROFITS, TRADING LOSSES, LOST TIME OR GOODWILL, EVEN IF THEY HAVE BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES, WHETHER IN CONTRACT, TORT, STRICT LIABILITY, OR OTHERWISE. THERE ARE NO THIRD-PARTY BENEFICIARIES OF ANY AGREEMENTS OR ARRANGEMENTS BETWEEN S&P DOW JONES INDICES AND GATEWAY, OTHER THAN THE LICENSORS OF S&P DOW JONES INDICES.