The series of five broadly diversified risk-based portfolios is aimed at 401(k) plan sponsors and participants who are looking for retirement investments that offer two critical layers of risk management — diversification and an active process of managing the threat of significant market losses, or tail risk.
The AlphaSector Target Risk Funds employ F-Squared's strategies to systematically de-risk equity and fixed income portfolio investments in challenging or bear markets, and then to re-risk as markets become more favorable. The funds are globally diversified and are allocated across four existing F-Squared investment strategies that encompass U.S. equities, international equities, fixed income, and alternative asset classes. The allocation to each strategy depends on the risk tolerance of each fund. All of the new funds employ strategies designed to de-risk by eliminating sectors within each asset class that are expected to generate near-term losses for investors. They may also invest aggressively in cash equivalents to minimize losses from equity and fixed-income investments.