Protected Equity Portfolio Strategy (PEPS)
The Protected Equity Portfolio (PEP) Strategy is Sapient’s core investment strategy, developed and refined over years of experience in equity market investing. The PEP Strategy seeks to provide investors with high growth potential while mitigating risk via downside protection over each individual shareholding. The strategy develops a focused investment philosophy by limiting the shares held in the portfolio to a select number with high growth potential.
The issue with holding a diversified portfolio is that while the portfolio is diversifying away risk it is at the same time diversifying away potential gains. By limiting the number of shares in the portfolio and protecting each share individually with Put options the portfolio is able to obtain a high growth potential while limiting downside losses.
Benefits of the strategy include;
Exposure to Growth Assets
Adopt a focused investment portfolio and gain exposure to a select number of high growth stocks.
Direct Share Ownership
Receive all the benefits of direct share ownership such as dividends, franking credits, distributions as well as the capital growth.
Limit downside risk by holding Put protection over each individual shareholding.
Dynamic & Liquid
Shares are traded on the ASX and as such can be liquidated at any time should investors need to recall their capital.
This allows investors to keep the stocks that have performed well and sell the poor performing stocks at the higher protected level.
Each individual’s portfolio is tailored to suit their needs and investors always have the final say as to what they invest into.
Lock in the Gains
By increasing the level of Put protection, investors are able to lock in gains in the share price.
Investors have the peace of mind and ‘sleep at night’ factor knowing their portfolio is protected from downside share market movements and volatility.
For a copy of the PEPS paper that outlines in detail the trading strategy please click here