Position Papers

• Inflation comes in waves rather than as a steady increase, driven by factors like demand-pull and cost-push inflation, monetary policy, and commodity price fluctuations.
• Inflationary waves, particularly those triggered by the COVID-19 pandemic, energy price spikes, and geopolitical tensions, have all impacted global prices.
• Asset classes perform differently in equity bull and bear markets, and periods of rising and falling prices. While commodities and real estate generally perform better in high inflationary environments, investors are well-served to include TIPS and equities.

Mechanically, high-yield bonds have the same features as other types of bonds. They have a scheduled maintenance payment, a principal repayment at a specified maturity date, and in some but not all cases, maintain priority over other obligations in the capital structure. While the maintenance payment (or coupon) is typically fixed, the value of the bond is determined by the market's assessment of the probability of repayment.

The Fed's plan to tighten monetary policy and tighter regulation discouraging broker-dealers from taking risk, has led to less liquidity in the U.S. stock market and exacerbated daily moves.

Buying outright puts to hedge equity downside can be costly and a constant drain on portfolio returns.

• The Put-Spread Collar is the popular form of portfolio protection.
• Passaic's Hedged Equity strategy is a low-risk equity strategy that seeks to provide capital appreciation through equity market participation while limiting the downside.
• Passaic's approach to implementing a put-spread collar is driven by an informed understanding of option market dynamics which includes a proprietary view of implied volatility, term structure, and skew dynamics.

In this piece, we will briefly explain how various defensive options strategies and passive option indices work and why Passaic Partners' tactical dynamic approach produces better risk-adjusted returns with transparency and liquidity.

From 1981 to today, something as simple as a stamp has gone from a cost of $0.18 to $0.47. How do CIOs with long term investment horizons protect their constituents from such heavy evaporation of purchasing power over the long run? For some time now, it seems the concept of inflation and the impact it can have on investor portfolios has been relegated to the world of academia. Any investor who really experienced the last time inflation was over 10% was born in 1960 and had just begun their careers. In the recent past, practitioners who have rung the bell to warn of rising inflation and responded with investments in commodities, TIPs and MLPs have had a volatile ride and been viewed by some as the “person who cried wolf”.