Reducing beta exposure on personal portfolio

I’ve been thinking about reducing my (market) beta exposure on my personal portfolio, given potential recession and market turbulence going forward. Anyone else doing this? I don’t have easy access to futures through my broker (would have to rewrite the policy, which I may do later), but I have been thinking of a few options. 1) Short an index ETF (20 bps mgmt fee, uncertain what my margin interest would be) 2) Buy an inverse ETF (like RMS or RRZ, mgmt fees of 95bps) 3) Buy an index put (not sure on price, and also need to rework my policy). Anyone else care to comment on whether reducing beta exposure makes sense now (and would you bring it to zero, or just lower the exposure) and/or the sensibility of these instruments for doing it?

http://en.wikipedia.org/wiki/Market_timing As they indicate, market timing is very tough to win at. Odds are you’ll lose by trying to do this. Also make sure you’ve the proper perspective. Your personal wealth includes any personal residence equity and value of human capital. Depending on where you are in life these may be the dominant portions of your portfolio, so you might have less beta than you suspect.

When i want to reduce my beta i short the appropriate ETFs (why go long an inverse etf and pay 75bps more when you can, witht he proper homework, short the appropiate ETF yourself)…also, why go long an inverse ETF if you expect the market to fall. if the market falls you eat a loss on your inverse and your core portflio if i’m not mistaken… shorting the appropriate etf takes up capital or margin space but does the trick. Also easy to keep track of and easy to unwind.

My understanding is that an inverse index etf will rise if the market tanks; that is what makes it an inverse. The mgmt fee difference is about 75 bps. I am trying to figure out what would justify the spread: 1) if the shorting interest is > 75 bps, then it is a wash, 2) you don’t have to worry about increased exposure if the market moves against you, and 3) a convenience fee if your IPS prohibits shorting (not applicable here).

bchadwick Wrote: ------------------------------------------------------- > 1) Short an index ETF (20 bps mgmt fee, uncertain > what my margin interest would be) This is usually how institutional investors hedge and/or reduce Beta

strikershank Wrote: why go long an inverse ETF if > you expect the market to fall. if the market falls > you eat a loss on your inverse and your core > portflio if i’m not mistaken… An inverse ETF is supposed to perform “inversely” (opposite) to the market. So if the market declines, the fund is supposed to rise.

Do any of you have to deal with compliance issues for your personal portfolios? I should notify our business prevention department ahead of every trade.

ya ya - i wasn’t paying full attention and i wrote somethign that was wrong. my mistake. i should’ve picked up on inverses etf’s better given i know what they do. oh well. thanks for pointing out the obvious mistake (that unfortuantely wasn’t obvious to me when i wrote it)

Onegin Wrote: ------------------------------------------------------- > Do any of you have to deal with compliance issues > for your personal portfolios? I should notify our > business prevention department ahead of every > trade. Yes, at some firms there are electronic programs where you have to enter the ticker symbol of what you want to trade and they’ll automatically let you know if you can or not. It depends on what the PM’s have been trading recently and what positions the funds hold. You also have to submit broker statements, and depending on your job level there might be restrictions on the time period you need to hold stock before you sell it.

I’m fully locked down. Pre-clearance on all trades, no trading the broker / dealers, no shorting, puts only on a few indices, surrender short-term gains. Takes a lot of the fun out of things, but I don’t have much time to think about pa trades anyway.

im thinking about doing this too, i only have three positions in my porfolio so theres a significant amount of risk and its certainly not ‘efficient’ Im actually looking for a good value deep value or distressed securities fund. anyone know any good names?

TPain88 Wrote: ------------------------------------------------------- > Onegin Wrote: > -------------------------------------------------- > ----- > > Do any of you have to deal with compliance > issues > > for your personal portfolios? I should notify > our > > business prevention department ahead of every > > trade. > > > Yes, at some firms there are electronic programs > where you have to enter the ticker symbol of what > you want to trade and they’ll automatically let > you know if you can or not. It depends on what the > PM’s have been trading recently and what positions > the funds hold. > > You also have to submit broker statements, and > depending on your job level there might be > restrictions on the time period you need to hold > stock before you sell it. i interveiwed at a buy-side shop that wouldn’t let you trade, period. So if you came in with a portfolio you would only be able to dispose of it into cash.

bchadwick Wrote: ------------------------------------------------------- > I’ve been thinking about reducing my (market) beta > exposure on my personal portfolio, given potential > recession and market turbulence going forward. > Anyone else doing this? Yup, lots of people. Taking off leverage and putting on more shorts and just covering your a$$ in general since obviously anything can happen in the current market. It think it’s going to remain nasty in Q1. I see gains in the equity market driven by Fed cuts more so than corp profits and lots of volatility. I’m long only until the FOMC meeting next week, then going to toss in some index shorts.

Short XIUs. I mean… Going to California, Led Zepplin Willy

Did any of you guys end up doing this?