Insights

The Power of Less Downside: The 80:60 Case Study

Bruce Apted

Head of Portfolio Management – Australia, Active Quantitative Equity, Australia

15 July 2019

More Insights

The power of compounding is profound and well understood. What is less understood is the power of managing your downside. Too often we focus on the upside potential without due attention to the downside characteristics of investments. In this white paper we examine the power of reducing the downside even when the upside may also be limited. Specifically we focus on a strategy we call 80:60, a strategy that only participates in 80% of an up month’s return and only 60% of a down month’s return. Losing less to win doesn’t sound very exciting but as we will show it can be very powerful. It has many similarities with a sporting team that has a great defence or back line. Preventing the opposing team scoring can increase your chances of winning.

The Importance Of Seeking Financial Advice

The key ingredient to achieving positive retirement outcomes is to seek quality financial advice. This will enable individuals to:

Plan their retirement date and whether this is achievable based on their expectations
Decide how much they will need to save based on their expected living costs in retirement
Determine their contributions and ability to make further contributions

The Power of Less Downside: The 80:60 Case Study

Platform availability

Fund literature and PDFs

Forms, Notices & Policies

Glossary

Need help?

Please enter your questions and comments below. You can expect a reply from us soon.

Questions? Feel free to

This information is for informational purposes only, not to be construed as investment advice or a recommendation or offer to buy or sell any security. Investors should always obtain and read an up-to-date investment services description or prospectus before deciding whether to appoint an investment manager or to invest in a fund. Any views expressed herein are those of the author(s), are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may make different investment decisions for different clients. There are no guarantees regarding the achievement of investment objectives, target returns, portfolio construction, allocations or measurements such as alpha, tracking error, stock weightings and other information ratios. The views and strategies described may not be suitable for all investors. SSGA does not provide tax or legal advice. Prospective investors should consult with a tax or legal advisor before making any investment decision. Investing entails risks and there can be no assurance that SSGA will achieve profits or avoid incurring losses.

Performance quoted represents past performance, which is no guarantee of future results. Investment return and principal value will fluctuate, so you may have a gain or loss when shares are sold. Current performance may be higher or lower than that quoted.