Marc Odo
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Articles by Marc Odo
Hedged Equity as a Liquid Alternative
ETF Strategist Content Hub Why Liquid Alternatives Keep Disappointing — and What to Do About It Most liquid alternative funds fail a simple test: they cannot be held through a full market cycle — adopted in crises, abandoned on recoveries, and gone before the next bear market arrives. The liquid alternatives category has a lifecycle problem. Advisors and allocators adopt alternative strategies after a crisis, then abandon them when markets recover.
Hedged Equity as a Liquid Alternative
What Will Be Covered Hedged equity as a liquid alternative uses an options-based equity strategy — specifically Swan Global Investments’ Defined Risk Strategy (DRS), in continuous operation since 1997 — as a permanent alternatives allocation that stays invested in the equity market while actively managing downside risk through LEAPS put options.
Hedged Equity vs. Bonds: Seeking A More Reliable Diversifier for Modern Portfolios
Why the 60/40 Portfolio Doesn’t Always Diversify “Diversification” has been the driving principle of investing and risk management for generations.
Covered Calls: Is the “Bird in Hand” Strategy Costing You Bigger Gains?
Written by: Marc Odo | Swan Global Investments A fundamental lesson in finance is a security’s price should be the present value of all future cash flows. Cash flows typically consist of a regular string of dividend payments and an assumed liquidation value at the end of the time horizon. These investment gains are classified as “income” and “capital gains,” respectively. The management of an individual company tries to strike the proper balance.
The 3 Drivers of Covered Call Fund Returns-And Why Total Return Is What Really Matters
Written by: Marc Odo | Swan Global Investments Assessment and selection of covered call funds is based on criteria like total return, distribution rate (sometimes referred to as yield), and fees. Total return may be the most important as it drives the long-term sustainability of a fund’s distributions. Total return in covered call strategies consists of three components: dividends collected, option income profits or losses, and capital appreciation or depreciation.
How Are the Caps in Buffered ETFs Determined?
Written by: Marc Odo | Swan Global Investments The popularity of Buffered ETFs, also referred to as Defined outcome ETFs, has exploded over the last five years. Historically there has been a wide deviation in caps over the years. A natural question for investors is, “how are the caps set in the buffer ETFs?” The answer has to do with the basic structure of most buffered funds.
Buffered ETFs Explained: How Are Their Caps Really Set?
Written by: Marc Odo | Swan Global Investments The popularity of Buffered ETFs, also referred to as Defined outcome ETFs, has exploded over the last five years. Historically there has been a wide deviation in caps over the years. A natural question for investors is, “how are the caps set in the buffer ETFs?” The answer has to do with the basic structure of most buffered funds.
Expecting Too Much? What Investors Often Miss About Buffered Funds
Written by: Marc Odo | Swan Global Investments As investors have flocked to defined outcome funds or buffered outcome ETFs, certain questions have arisen, principally around buffered ETF performance and pricing. As a relatively new investment solution, it’s unsurprising that it takes some time before investors understand the risk and returns of an unfamiliar product.
Buffered ETFs: Smarter Protection in Volatile Markets?
Written by: Marc Odo | Swan Global Investments The Defined Outcome investment landscape is rapidly evolving, offering new opportunities for managing risk and return with greater precision. As market conditions shift, understanding how these strategies function—and where they fit within a diversified portfolio—is essential. Over the last several years there has been explosive growth in the category of Defined Outcome Funds. Until October 2024, the category of Defined Outcome didn’t even exist.
The Trade-Off in Covered Call Strategies
Choosing Between Income Today vs. Potential Growth Tomorrow A fundamental lesson in finance is a security’s price should be the present value of all future cash flows. Cash flows typically consist of a regular string of dividend payments and an assumed liquidation value at the end of the time horizon. These investment gains are classified as “income” and “capital gains,” respectively. The management of an individual company tries to strike the proper balance.
A Deep Dive into Covered Call ETFs
Covered call strategies have been around for a very long time, but covered call ETFs have recently enjoyed a massive increase in popularity. The reasons for this surge are discussed in a separate post, but it is worth reminding investors to know what you own. What are the drivers of returns for covered call ETFs or derivative income funds? What are the risks? What conditions will be favorable and what will be unfavorable? We’ll dive into those questions in this post.
A Deep Dive into Buffered ETFs
The Defined Outcome investment landscape is rapidly evolving, offering new opportunities for managing risk and return with greater precision. As market conditions shift, understanding how these strategies function—and where they fit within a diversified portfolio—is essential. Over the last several years there has been explosive growth in the category of Defined Outcome Funds. Until October 2024, the category of Defined Outcome didn’t even exist.
Weathering Market Ups and Downs with Hedged Equity
Written by: Marc Odo | Swan Global Investments “It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…” ~ A Tale of Two Cities, Charles Dickens The last five years have bombarded investors with a seemingly...
Why Active Management Matters in Hedged Equity Strategies
Written by: Marc Odo | Swan Global Investments Swan Global Investments is a pioneer in hedged equity investing. Founded in 1997, Swan’s motto has been “Always Invested, Always Hedged” for over a quarter century. There were very few money managers promoting hedged equity in the late 1990’s. Therefore, it has been gratifying and validating to witness the explosion of interest in hedged equity over the last five years.
Hedged Equity: For the Best of Times, For the Worst of Times
“It was the best of times, it was the worst of times, it was the age of wisdom, it was the age of foolishness, it was the epoch of belief, it was the epoch of incredulity, it was the season of Light, it was the season of Darkness, it was the spring of hope, it was the winter of despair, we had everything before us, we had nothing before us…” -A Tale of Two Cities, Charles Dickens The last five years have bombarded investors with a seemingly never-ending array of challenges.
The Case for Active Management of Hedged Equity
Swan Global Investments is a pioneer in hedged equity investing. Founded in 1997, Swan’s motto has been “Always Invested, Always Hedged” for over a quarter century. There were very few money managers promoting hedged equity in the late 1990’s. Therefore, it has been gratifying and validating to witness the explosion of interest in hedged equity over the last five years.
The Case for ‘Active-Active’ Management in a Covered Call Strategy
Written by: Marc Odo | Swan Global Investments Maximizing Opportunities in Derivative Income The derivative income space has grown tremendously over the last five years. Since the end of 2019 there has been a ten-fold increase in assets invested in derivative income ETFs and mutual funds, from $7bn to $73bn. Clearly, investors are seeking options to diversify their income sources to be less dependent on the Fed’s monetary policy.
Maximizing Opportunities in Derivative Income
The derivative income space has grown tremendously over the last five years. Since the end of 2019 there has been a ten-fold increase in assets invested in derivative income ETFs and mutual funds, from $7bn to $73bn. Clearly, investors are seeking options to diversify their income sources to be less dependent on the Fed’s monetary policy.
Reducing Interest Rate Risk with Derivative Income and Dividends
Written by: Marc Odo | Swan Global Investments Options for Income Since the Global Financial Crisis of 2007-09, fixed income investors have suffered the worst of both worlds. For a dozen years they endured the stingiest of yields on their fixed income holdings. This was followed by painful losses in 2022 as the Federal Reserve finally raised rates to combat the worst inflation seen in a generation.
Options for Income
Since the Global Financial Crisis of 2007-09, fixed income investors have suffered the worst of both worlds. For a dozen years they endured the stingiest of yields on their fixed income holdings. This was followed by painful losses in 2022 as the Federal Reserve finally raised rates to combat the worst inflation seen in a generation. Although bond yields are now closer to their historic levels, bond investors are still nervous and uncertain about what comes next.
Pacer ETFs Investment Insights Summit
President Pacer ETFs Distributors Read Sean's Bio Sean O’Hara is the President of Pacer ETF Distributors. Sean began his career at PLANCO/Hartford in 1985, where he spent 22 years as wholesaler, divisional manager, and managing director of the national wholesaler team.
Steering Clear of Passive Derivative Income Traps: An Active Strategy
Written by: Marc Odo | Swan Global Investments Escaping the Devil’s Bargain Studies on high-yield, passive derivative income strategies (covered calls) reveal a significant negative relationship between income and overall returns. Investors who overlook this trade-off might have unwittingly entered into a disadvantageous “Devil’s Bargain”.
Escaping the Devil’s Bargain
Studies on high-yield, passive derivative income strategies (covered calls) reveal a significant negative relationship between income and overall returns. Investors who overlook this trade-off might have unwittingly entered into a disadvantageous “Devil’s Bargain”.
Implications of the Never-Ending Drama and Trajectory of U.S. Finances
Written by: Marc Odo | Swan Global Investments Mess Around & Find Out: Downgrades, Deficits, Debt & Demographics A cruder version of the above phrase, “Mess Around and Find Out”, has gained popularity in the American vocabulary. Politicians keep messing around with the creditworthiness of the nation’s sovereign debt. On August 1st, they found out.
Short-Term vs. Long-Term Hedged Strategies
By Marc Odo, CFA, FRM, CAIA, CIPM, CFP 2022 illustrated the need for a capital preservation component in investors’ portfolios. Rising interest rates created losses in fixed income that have matched losses in equities. With bonds failing to perform the capital preservation role, a hedged equity strategy would seem to fit the bill. However, not all hedged equity solutions are the same. In an extended bear market some are likely to do better than others.
Short-Term vs. Long-Term Hedged Equity Strategies
2022 illustrated the need for a capital preservation component in investors’ portfolios. Rising interest rates created losses in fixed income that have matched losses in equities. With bonds failing to perform the capital preservation role, a hedged equity strategy would seem to fit the bill. However, not all hedged equity solutions are the same. In an extended bear market some are likely to do better than others.
Bank Failures 2023 & The Dangers Still Lurking Beneath the Surface
It’s been said that the road to Hell is paved with good intentions. The difficult situation that many mid-size, regional banks currently find themselves in is a direct consequence of policy decisions made over the last 15 years. While the intentions behind these policies were well-meaning, the consequences of these decisions have been dire. 2023 has seen the biggest bank failures since the Global Financial Crisis of 2007-09.
Mess Around & Find Out
A cruder version of the above phrase, “Mess Around and Find Out”, has gained popularity in the American vocabulary. Politicians keep messing around with the creditworthiness of the nation’s sovereign debt. On August 1st, they found out. Following yet another showdown and near-default on the country’s fiscal obligations, on August 1st Fitch Ratings downgraded the United States’ credit rating from AAA to AA+.
Mess Around & Find Out
Demographics The third major headwind facing the United States as well as many developed and emerging economies are negative demographic trends. As Baby Boomers retire and start drawing entitlements the burden on the economy increases.
The Danger Beneath the Surface: How Bad Policy Led to Bank Failures in 2023
Written by: Marc Odo | Swan Global Investments It’s been said that the road to Hell is paved with good intentions. The difficult situation that many mid-size, regional banks currently find themselves in is a direct consequence of policy decisions made over the last 15 years. While the intentions behind these policies were well-meaning, the consequences of these decisions have been dire. 2023 has seen the biggest bank failures since the Global Financial Crisis of 2007-09.
The Danger Beneath the Surface: How Bad Policy Led to Bank Failures
It’s been said that the road to Hell is paved with good intentions. The difficult situation that many mid-size, regional banks currently find themselves in is a direct consequence of policy decisions made over the last 15 years. While the intentions behind these policies were well-meaning, the consequences of these decisions have been dire. 2023 has seen the biggest bank failures since the Global Financial Crisis of 2007-09.
The Correlation Conundrum
Written by: Marc Odo | Swan Global Investments 2022 is a year many investors would like to forget. Even those who spread their eggs across many baskets likely noticed many of their positions were negative for the year. What happened? In this post we will argue 2022’s poor returns were not a surprise and should have been expected. Diversification didn’t just fail in 2022. Diversification has been broken ever since the Global Financial Crisis 15 years ago.
You Can’t Fight the Fed: One Constant in a World of Change
Written by: Marc Odo | Swan Global Investments It seems like everything has changed over the last year. The standard 60% equity, 40% bond model that worked so well for decades is down 16.6% through October 31st. The security blanket of “the Fed put” bailing out investors is nowhere to be seen. Inflation, long dormant, has surged to be the number one concern for many in America and across the globe. Cryptocurrency and other “moonshots” that made billionaires out of thin air are rapidly evaporating.
25 Years in Risk Management
Quick – where were you 25 years ago? The song, “Wannabe” by The Spice Girls was the #1 song in America in the spring, later followed by “MMMBop” by Hanson. “Men in Black” would dominate the summer box office, only to be dwarfed by “Titanic” later in the year. The San Antonio Spurs drafted Tim Duncan and the Houston Oilers football team moved to Tennessee. People were starting to worry about the dreaded “Y2K” bug.
Enhancing Market Analysis with Options Market Insights
Written by: Marc Odo | Swan Global Investments Reading the Tea Leaves GDP growth, unemployment, and consumer confidence. Still others keep their gaze focused on government policy and base their decisions on what comes out of Congress or the Fed. A less understood source of information is the vast market of put and call options. By analyzing factors like the VIX, skew, and the term structure of options, you can gain insight into the hopes and fears of broader, traditional markets.
Are We Starting the “Lost Decade” for Market Returns?
Written by: Marc Odo | Swan Global Investments Historic Volatility, Election Uncertainty, & The Fed’s Dilemma 2020 has been an incredibly unpredictable year—but it’s not over yet. As we enter Q4, another rise in COVID-19 infections seems imminent, uncertainty surrounding the election’s outcome is rising each day, and Congress remains at a stalemate when it comes to a highly anticipated pandemic relief package.
Historic Volatility, Election Uncertainty, & The Fed’s Dilemma
ETF Strategist Channel By Marc Odo, Swan Global Investments on October 1, 2020 By Marc Odo, CFA®, CAIA®, CIPM®, CFP®, Swan Global Investments 2020 has been an incredibly unpredictable year—but it’s not over yet. As we enter Q4, another rise in COVID-19 infections seems imminent, uncertainty surrounding the election’s outcome is rising each day, and Congress remains at a stalemate when it comes to a highly anticipated pandemic relief package.
The July Jobs Report, Congress at a Stalemate, and Trade Tensions
ETF Strategist Channel By Marc Odo, Swan Global Investments on August 28, 2020 By Marc Odo, CFA®, CAIA®, CIPM®, CFP®, Swan Global Investments The U.S Bureau of Labor Statistics released the July jobs report the first week of August, highlighting that the U.S. added 1.8 million jobs in July, a small step forward for a country that’s still down 12.9 million jobs during the pandemic.
Preparing Portfolios for Uncertainty
Written by: Marc Odo | Swan Global Investments The July Jobs Report, Congress at a Stalemate, and Trade Tensions The U.S Bureau of Labor Statistics released the July jobs report the first week of August, highlighting that the U.S. added 1.8 million jobs in July, a small step forward for a country that’s still down 12.9 million jobs during the pandemic.
The Dire Outlook for Bonds in the Wake of COVID-19
By Marc Odo, CFA®, CAIA®, CIPM®, CFP®, Swan Global Investments Over the coming decade or two, bonds are unlikely to fulfill their dual role of income and capital preservation. Bond investors will be forced to choose between income or capital preservation, and there is a good chance they could end up with neither.
When Market Experts Disagree
Written by: Marc Odo | Swan Global Investments Market Timing Whiplash The old investing adage “buy low, sell high” can certainly be a lucrative strategy if done correctly and with precision. However, the perpetually unpredictable nature of the markets makes it nearly impossible to consistently identify when it is the right time to “get in” and “get out” of the market.
The Dire Outlook for Bonds in the Wake of COVID-19
Written by: Marc Odo | Swan Global Investments From Bleak to Dire Over the coming decade or two, bonds are unlikely to fulfill their dual role of income and capital preservation. Bond investors will be forced to choose between income or capital preservation, and there is a good chance they could end up with neither.
Does Fixed Income Need Fixing?
The Defined Risk Strategy as a Capital Preservation Solution Where the DRS Fits: Part 4 By Marc Odo, CFA®, CAIA®, CIPM®, CFP®, Swan Global Investments Across Swan’s client base, there are some who utilize the Defined Risk Strategy (DRS) as an alternative to fixed income. Traditionally, bonds have played two roles within a portfolio: generation of yield and protection of principal.
How Long-Term Put Options Help Investors Take Advantage of a Bear Market
By Swan Global Investments Unpredictable markets can make growing wealth and avoiding losses difficult. Put options are an effective way to manage and reduce this unpredictability. Even more effective are long-term put options, also known as LEAPS: Long-Term Equity Anticipation Securities. A long-term equity anticipation security are options with expiration dates longer than 12 months. A LEAPS put option offer risk mitigation for a longer time horizon without capping potential upside.
The Dangers in High Yield Bonds & CLOs | ETF Trends
Is It Worth the Risk? By Marc Odo, CFA®, CAIA®, CIPM®, CFP®, Swan Global Investments In previous posts, I’ve discussed the risks in treasuries and corporate bonds in this current economic environment. But what is the outlook for non-investment grade, or “junk” bonds? What about the massive growth in the collateralized loan obligation (CLO) market? Investors in this space have always emphasized higher levels of income or growth rather than capital preservation.
Why Investors Should be Cautious Investing in Corporate Bonds | ETF Trends
By Marc Odo, CFA®, CAIA®, CIPM®, CFP®, Swan Global Investments There are numerous risks working against treasuries, corporate, and high yield bonds that pose tremendous challenges to their traditional roles of income and capital preservation as well as their reputation of being safe investments. With Treasury yields so low, some investors look to corporate bonds to fill their income and return needs.
Redefining Income in a Low Yield World with Systematic Withdrawals | ETF Trends
By Marc Odo, CFA®, CAIA®, CIPM®, CFP®, Swan Global Investments Historically, investors in or near retirement have relied primarily on bonds for “mailbox money” necessary to fund their golden years. Going forward, investors and advisors will need to redefine their concept of “income” and reconsider how they fill their “mailbox”.
Long-Term Ripple Effects of Treasury Bond Risks | ETF Trends
ETF Strategist Channel By Marc Odo, Swan Global InvestmentsonAugust 26, 2019 By Marc Odo, Swan Global Investments There are numerous risks working against treasury bonds, corporate bonds, and high yield bonds that pose tremendous challenges to their traditional roles of income and capital preservation as well as their reputation of being safe investments. Bonds have been a good investment for the last 37 years.
Excessive Leverage in Options-Based Strategies
By Marc Odo, Swan Global Investments Evaluating Options Strategies, Part 1 There is a familiar story that pops up every so often in the pages of the financial press: “Option Strategy Blows Up, Loses Nearly All of Investors’ Money.” Readers shake their heads and wonder how anyone could be so foolish to lose 50%, 75% or 100% so quickly. This leads investors to conclude options are dangerous instruments that should be avoided altogether. But this line of reasoning is far too simplistic.
Why Investors Should Rethink Fixed Income
ETF Strategist Channel By Marc Odo, Swan Global InvestmentsonDecember 26, 2018 By Marc Odo, Swan Global Investments Investors have been accustomed to very low yields for the past decade. The last time the Federal Reserve implemented a program increasing rates was June 2006, over a decade ago. The period of loose monetary policy following the Global Financial Crisis was one of the longest and steepest in history.
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