Advisors and their clients all too clearly remember the financial crisis of 2007 to 2008. Recent events in the Middle East and Japan have caused these memories to come to the forefront, re-sensitizing investors to "black swan" risks that were previously unimaginable. The impact of the ongoing tumult is that investors are more focused than ever on managing volatility and finding ways to protect their portfolios while still seeking market-beating returns. The good news is that these investors are now aided in this quest by new methods in portfolio construction, supported by advances in technology. Taken together, these innovations in tactics and technology offer the promise of upside investment potential coupled with downside protection.
"All the volatility in the last few years has resulted in creativity on the part of strategy providers and investment managers," says Scott Egner, manager, TD Ameritrade Institutional's Managed Account Solutions. "Technology has made this happen, with the ability to deliver many strategies in a single account a driving force behind the changes."
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