In 2009, U.S. banking regulators subjected 19 of America's largest and most important banks (the "Too Big To Fail" ones) to so-called stress-tests in order to understand how well each bank's capital reserves would meet different challenging economic scenarios.

Here's a thought: Stress-testing portfolios isn't only a smart idea for banks - individual investors could be taking that approach too. In these volatile economic times, all kinds of hedging strategies are being put to the test. Now more than ever, asset managers and investors alike should be assessing how well portfolios are hedged for volatility. Which strategies are best able to deflect volatility in client portfolios when real market stress shows up?

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