A downside-protected portfolio lets you participate in the upside potential of the S&P 500 while protecting against downside losses. To reduce the cost of downside protection (“est. max loss”), the strategy sets a "current upside cap" on returns. This means that as the S&P 500 trends higher, the portfolio returns will sacrifice some of the upside, subject to periodic re-optimisation (hyperlink). The downside protection and the cap on upside keep the protected portfolio less volatile compared to the S&P 500, and helps shield against major market downturns.

When should you consider a protected portfolio?

1. Risk-averse - if you are generally risk-averse and prefer to minimise your potential losses while still capturing some upside potential, a downside-protected portfolio is ideal. 

2. Waiting for opportunities - for those who have been on the sidelines and are currently holding excess cash, this portfolio offers an excellent solution. Transitioning to a downside-protected portfolio lets you enter the equity markets with greater confidence. 

3. Currently invested in US equities - if you are currently invested in the US markets but are unsure about the market’s direction, you can consider switching to a downside-protected portfolio in the meantime, instead of exiting the market completely.