The DCM Investment Strategy pursues positive equity returns utilizing a bond fund portfolio.
DCM purchases S&P 500 Index options with a calendar year duration representing 100% of the client’s account value*. In up markets, the options provide participation in total up market returns. In down markets, equity market losses are limited to the cost of the options.
DCM places the majority of assets in the DCM Bond Fund Portfolio comprised of carefully selected closed-end bond mutual funds. This provides protection from equity market exposure and is focused on generating predictable income. The goal of the DCM Bond Fund Portfolio is to recover the purchase cost of the S&P 500 Index options.
Capture More of the Upside
And Avoid More of the Downside
An Investment Strategy That Feels Comfortable In Both Up Markets AND Down
By utilizing an option position, an investor is able to participate in the market's upside when things are positive, while allowing the option to expire worthless when markets turn down. The cost of the option is the only downside equity risk an investor will face. The DCM Bond Fund Portfolio returns adequate income to pay for the option position. The DCM Investment Strategy feels comfortable for both sides of the market: an equity position to capture market growth; a bond fund portfolio when the market declines.
* Initial year option investments may vary in duration. Options are purchased with a January expiration date. Index options vary in price from year to year. S&P 500 Index options for January 2019 calls purchased in January 2018 cost approximately 6%. Index options are typically purchased in blocks of 100, therefore corresponding market coverage may vary due to Index value at time of investment. The hypothetical examples shown do not include any management fees or trading expenses.
** The above hypothetical examples are for illustrative purposes of the option portion of the DCM Investment Strategy and assumes the DCM Bond Fund Portfolio achieves the targeted 12 month rate of return. Fluctuations in the bond market may impact the actual return and value of the DCM Bond Fund Portfolio and result in an ending portfolio value that is lower or higher than the amount shown.