BERWYN, PA — Envestnet (NYSE: ENV) has launched the Options Strategy Quantitative Portfolio (QP) to help investors manage risks associated with concentrated stock positions. This new offering aims to mitigate market volatility, tax implications, and liquidity concerns, providing a strategic path for advisors and their clients to unwind significant stock holdings safely.
Dana D’Auria, Co-Chief Investment Officer and Group President of Envestnet Solutions, explained the purpose behind this innovation: “Envestnet is focused on delivering solutions that can be customized to address any number of requirements within an investor’s portfolio. This new Options QP strategy is a great addition to our suite of personalized solutions, allowing advisors to build better portfolios around low-cost basis shares and other investment needs.”
Concentrated stock positions often arise from inheritances, company stock grants, or long-term holdings. These positions can pose significant risks if the stock’s value drops or if selling triggers high taxes. To address these challenges, Envestnet’s Options Strategy QP offers three customizable options-based strategies: covered calls, protective puts, and collar strategies.
Covered calls involve selling call options to generate income and reduce downside risk. Protective puts allow for setting a minimum selling price for a stock, offering protection against a price drop. Collar strategies combine buying puts and selling calls to provide downside protection at a lower cost, aligning with the investor’s risk tolerance.
Brandon Thomas, Co-Founder and Co-Chief Investment Officer of Envestnet, highlighted the strategy’s innovative approach: “The Options Strategy QP is underpinned by the robust, quantitative methodology and dedicated support the industry has come to expect from us. It is designed to help advisors and their clients take advantage of options-based strategies on their terms.”
The Options Strategy QP is developed by Envestnet’s quantitative asset management unit, QRG Capital Management, Inc. It provides a digital survey within the Envestnet platform to help advisors and clients tailor their strategies to match specific investment goals and risk preferences.
Hunter Willis, CFA, Portfolio Manager for Envestnet’s Quantitative Research Group, noted the potential benefits: “Our rules-based process is key to helping high-net-worth investors potentially increase returns from concentrated stock holdings through strategic liquidation while reducing risk and offsetting taxable gains.”
This new strategy underscores Envestnet’s commitment to providing innovative, customizable investment solutions that address contemporary financial challenges.
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