Megan Horneman Quoted on 60-40 Investing in Kiplinger

“Lower volatility with 60-40 Investing

Alternatives can help a 60-40 investing portfolio during periods of “big spikes in volatility,” says Megan Horneman, chief investment officer at Verdence Capital Advisors. To hedge stock risk, which accounts for about 90% of the volatility in a 60-40 portfolio, she suggests adding a market-neutral fund. These funds vary in approach, but the common thread is they move to their own beat, independent of the stock market. Low volatility and steady (albeit modest) returns are common characteristics.

One of the steadiest market-neutral strategies is merger arbitrage. This involves buying stocks in soon-to-be-acquired companies after a deal has been announced. The fund earns a profit on the difference between the post-announcement price and the price when the deal closes.”

Read more from Megan in Kiplinger.

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