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Philosophy
At Gateway, we believe that:
Equities Are Risky, But Reliable
Short-term risks create challenges, though diversified equity portfolios have historically generated returns that outpace inflation. Equity market exposure combined with index options can potentially mitigate losses while benefiting from the market’s propensity to rise over the long term.
Options Are a Tool for Risk Management
Options-based strategies have the potential to enhance risk-adjusted returns by accessing the implied volatility risk premium, generating cash flow for investors, and reducing the risks associated with equity market exposure.
Broad Application Offers Multiple Solutions
Index option-based strategies can be used in many portfolio applications, potentially enhancing an equity portfolio; diversifying fixed income allocations; or offering a liquid, transparent, and relatively low-cost component to an alternative program.
Active Judgement Can Provide Better Outcomes
Each market environment and investment objective is unique and requires a dynamic tool kit. The consistent application of a disciplined, active investment management process backed by an extensively experienced team can potentially add value for investors and improve outcomes.
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 portfolio
- Exchange-traded – avoids counterparty risk
- Robust liquidity – avoids illiquidity risks
- Deep, competitive market – low transaction costs
- For taxable accounts – facilitates loss harvesting and tax efficient returns
We believe that consistency is key to long-term success
At Gateway, our team is focused on applying decades of experience in quantitatively driven equity portfolio management and index option-based investing to meet our clients’ specific investment needs. Our approach seeks to maintain equity market exposure while managing volatility to enhance risk-adjusted return.
We believe that the consistency fostered by a team-oriented approach is one key component of long-term success. Our extensively experienced portfolio management and operational teams are in regular communication and coordination, offering clients and prospects a collaborative approach in building both active and rules-based solutions that address unique investment goals and objectives.
Risk management is a core tenet of our investment philosophy
Gateway takes a comprehensive approach to investment risk management.
Index-based options are our investment risk management instrument, embodying our overall risk management philosophy. The hedging overlay relationship between index options and diversified equity portfolios removes an element of uncertainty that is often associated with risk management approaches that are based on asset class diversification or long-only/long-short individual security selection. This relationship gives our risk profile analytics a level of reliability that facilitates real-time decision making. It also allows for stress testing the entire portfolio in different market and volatility environments and enables us to measure the effects of changes in the portfolio prior to implementation.
