MIAMI, July 20, 2015 /PRNewswire/ -- Universa Investments L.P., a Miami-based investment management firm specializing in equity tail-hedging strategies for institutional clients, announced today a strategic relationship with Towers Watson. As part of the relationship, Towers Watson will reserve sufficient capacity in Universa's tail risk strategy to hedge equity investments on behalf of their Endowment and Foundation clients.
The relationship will focus on the incorporation of tail hedging at the portfolio level, which requires a fraction of a portfolio's capital--with the goal of eliminating the 'left tail' of downside risk through an allocation to Universa's pioneering Black Swan Protection Protocol ("BSPP") strategy. The BSPP attempts to protect the long equity portion of the portfolio against systemic market shocks and crashes, with the goal of enhancing long-term returns and significantly lowering risk. Universa has managed this strategy since 2008 for institutional clients, and it builds on the pioneering work that Universa's CIO & Founder Mark Spitznagel began in the 1990's.
"All advisors need to be able to identify a range of possible outcomes in their clients' portfolios, both losses and gains, even if some of those outcomes currently seem unlikely," said Brian Caldwell, who advises U.S. Endowments and Foundations within Towers Watson. "This allocation to tail strategies allows non-profit executives to make investment management less complex, and consequently focus more money and time on their core missions."
Universa and Towers plan to work together to further educate Endowments and Foundations about the benefits, cost efficacy, and risk mitigating characteristics of tail hedging relative to other investment strategies.
"While today's monetary distortions and resulting valuations have made equity investing as perilous as ever, most investors do not have the luxury to wait for better investment opportunities," said Spitznagel. He added, "We allow for our clients to remain long equities, but to do so responsibly by hedging against the great systemic risk to their portfolio. Extreme equity valuations make a sudden, large drawdown back to historical norms the main risk in an institutional portfolio, which will also create a generational-type of investment opportunity."
About Universa Investments L.P.
Universa is an investment management firm that specializes in tail hedging as a means to enhance long-term equity returns. Universa was founded in January 2007 by its CIO Mark Spitznagel, with over a decade of implementation and cumulative, incremental development of its focused, positive asymmetric investment approach. Universa is currently registered with the U.S. Securities and Exchange Commission and the U.S. Commodity Futures Trading Commission. For more information about Universa please visit http://www.universa.net.
SOURCE Universa Investments L.P.