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- Title
Equity Collars as an Alternative to Debt in Traditional Asset Allocation.
- Authors
D'Antonio, Louis; Johnsen, Tommi
- Abstract
The key question explored in this research is whether an equity collar can provide the investor with better overall returns on a risk-adjusted basis if it is used in place of debt within the asset allocation mix during periods of financial distress or crisis in the markets. Findings indicate that when asset classes begin to exhibit high correlations and volatility rises significantly, the portfolio containing the collar as a substitute for debt outperforms the traditional debt/equity mix. The collar is a better hedge than debt when combined with an equity allocation under "crisis" conditions in the capital markets.
- Subjects
DEBT; ASSET allocation; EQUITY (Law); RATE of return; BUSINESS cycles; MARKET volatility
- Publication
Journal of Financial Service Professionals, 2011, Vol 65, Issue 4, p37
- ISSN
1537-1816
- Publication type
Article