IAI Active Management Strategy
Are You Playing Offense or Defense?
Just like sports, an investor must decide if it is better to have a good offense or a good defense. Due to inflation and increased life expectancy, it is important for an investor to have a good offense. However, "offensive" investments generally have greater market volatility and, therefore, carry greater risk than "defensive" investments.
Some investors have become so risk averse, they have thrown in the towel and are opting for traditional fixed vehicles (defensive investments). But while traditional fixed vehicles offer protection when the market goes down, they usually limit the upside potential investors' desire to not outlive their savings, and that can be achieved through offensive investment strategies.
Investment Advisors International (IAI) - Why Active Management?
• Globalization
• Growing personal, corporate and government debt levels
• Growing trade deficit
• A falling dollar
• Rising interest rates
• Ever-increasing cost of living
• Higher energy costs
• Real estate bubble
• Aging population without adequate savings
• War on terrorism
A strategy for investors to manage risk by allocating investments among a broad array of asset classes and holding such assets for an extended period of time regardless of market conditions.
Contrary to Passive Asset Allocation, the portfolio holdings are adjusted on a continuing basis in response to market and economic conditions.
• Money Market Accounts
• CDs
• Savings Accounts
• Fixed Annuities
• Bonds
• Universal Life Insurance*
A defensive strategy will protect against market volatility, but will it protect you from inflation and outliving your wealth?
• Stocks
• Mutual Funds
• Variable Annuities
• Variable Life Insurance Subaccounts**
• Real Estate
An offensive strategy can help with inflation and increased life expectancy, but will it protect you from downside of the market and inflation?
*Universal Life Insurance should be purchased on the basis of a need for life insurance and should not be purchased solely as an investment.
**Variable Universal Life Insurance should be purchased on the basis of a need for life insurance and should not be purchased solely as an investment. Variable Universal Life Insurance policies have features of both traditional life insurance and securities. The cash value will fluctuate in accordance with the investment performance of the underlying fund referred to as subaccounts.