By Canada Life | Dec. 15, 2021

In this short education piece, learn the basics of how options are used to reduce volatility and downside risk to help provide clients with a smoother investment experience. Options, which are also referred to under the broader umbrella of ‘derivatives,’ can often come with the reputation of being considered risky investment vehicles. Although there are circumstances where this reputation is warranted, there are also cases where options can be used as a risk management technique within a portfolio. You’ll also learn how options can be combined to create an option collar strategy, a sophisticated risk management technique with a goal of providing more consistent returns over time.

The award-winning team at Irish Life Investment Managers employ this option collar technique as part of the Canada Life Risk Reduction Pool, one of four unique risk management strategies used by Canada Life Risk-Managed Portfolios. This strategy helps provide some predictability and control within the portfolio as equity returns typically tend to fluctuate within a protected band. Read more to learn how we can help investors experience a smoother investment journey that helps them focus on their goals, not the markets.

This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. Canada Life Risk-Managed Portfolios are available through a segregated funds policy issued by Canada Life or as a mutual fund managed by Canada Life Investment Management Ltd. offered exclusively through Quadrus Investment Services Ltd., IPC Investment Corporation and IPC Securities Corporation. Make your investment decisions wisely. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus before investing. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. A description of the key features of the segregated fund policy is contained in the information folder. Any amount allocated to a segregated fund is invested at the risk of the policyowner and may increase or decrease in value.

Canada Life and design, and Canada Life Investment Management and design are trademarks of The Canada Life Assurance Company.