Dynamic hedging can solve the retirement income product dilemma

Craig Racine, Managing Director and Chief Investment Officer of Gyrostat Capital Management


The problem: A lack of retirement income products which protect and grow capital through the complete investment cycle

What is needed: Retirement income product specifications – the criteria to be satisfied

The solution: Dynamic hedging – technology to the rescue - "blue chip shares with protection for retiree income"

In plain speech, when Gyrostat utilises dynamic hedging of every $ 1 invested, approximately 95c buys the stock, and around 5c the lowest cost protection. As the market price moves, the “gyrostat” is brought back into balance to restore this 95:5 recipe. This means if the stock falls, the value of protection goes up – the protection has done its job and a portion is sold for cash. On stock rises, the value of protection falls and more is acquired.

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