Managed risk products protect a client's portfolio from volatility in the markets, says Irma Bribiesca, Director, ETF Product Development and Strategy, Transamerica Asset Management, at the 2020 Inside ETFs conference.
"It protects your portfolio from the downside of volatility," she said, adding that while managed risk has been around for a while for institutional investors, it didn't exist for retail clients as ETFs until recently.
Transamerica launched its risk management portfolio in 2017 with five ETFs, she said.
"They're portfolios constructed with safe assets and risky assets. Equities and fixed income," she said. "When volatility in the market picks up, these strategies are dynamically are allocated to fixed income. To protect the downside, give you some downside protection. When the market is stable, they are fully allocated to equities."
Even though 2018 and 2019 were typically a low-vol enviornment, there were spikes of volatility when the ETFs did shift their allocations, she said.