MARLBOROUGH, Mass., Dec. 5, 2019 /PRNewswire/ -- The i-PRT offers a way to avoid eminent investment losses while also capturing the gains when the market recovers. DALBAR, a leading independent financial research firm, has shown that panic is the culprit behind most investor underperformance. Investors in a panic gain relief by having an alternative to destroying their investment program.
For a quarter of a century the DALBAR investor behavior study (QAIB) has shown significant underperformance of the average investor due in large part to bad investor behavior. In today's world investors are bombarded with media reports of market downturn and recession predictions from trusted sources on television, social media and in online news outlets. Even a temporary 400 point dip in the Dow this past Tuesday might cause panic to set in and the investor to take action and withdraw from the market.
Research shows that 85% of market recoveries from a significant decline occurs within 3 months but many investors are too consumed by fear to wait that long. Statistically, the best option is to "take no action" however, when an investor rejects this choice an alternative to withdrawal is needed. That is the goal of DALBAR's Investor Panic Relief Tool (i-PRT), a smart alternative to the costly mistake of abandoning investments in a down market. This tool is a resource for financial advisors and investors who seek portfolio protection.
i-PRT is an Index Put hedging strategy that acts as "insurance" for a specific period of time to protect an investment portfolio from future loss. With an investment of 1% to 2% of the total portfolio value, the investor can be prepared for an expected market crisis. If the market remains firm, the only loss is the cost of the Put. "Attempts to educate investors have been ineffective. We believe advisors and institutions can help manage investor panic by being well prepared," says Lou Harvey, President of DALBAR.
The Investor Panic Relief Tool (i-PRT) is being offered by DALBAR and is available at no cost in a beta release. DALBAR encourages use of the tool and asks for feedback through a form on the website. For questions about i-PRT or DALBAR, please email [email protected].
SOURCE DALBAR, Inc.
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