MoneyLife Talk Show Chuck Jaffe Interviews Joe Halpern

Joe Halpern discusses Defined Outcomes as well as general market commentary with Chuck Jaffe of the MoneyLife Talk Show


The opinions of Joseph Halpern are as of the date of this interview, are subject to change and are not a predictor of future events. The materials presented here are not to be intended to be, nor should it be construed, as a recommendation, investment advice, an offer to sell or buy, a solicitation, or an endorsement of a particular product or investment strategy. Exceed Investments full disclosure is available here.



Nasdaq Exceed One Year Index Performance Review

In September 2014, Exceed Investments and the Nasdaq launched the first family of defined outcome indexes (Here’s our original blog post on the launch). The indexes allow investors to access defined outcome investments within a wide range of investment solutions, providing public markets with:

  • Shaped exposures to the S&P 500, allowing investors to pre-define their preferred risk metrics and thereby experience a controlled investing experience
  • Widespread access to strategies generally only available to institutions and ultra high net worth individuals via insurance or banked wrapped programs
  • A liquid and diversified portfolio of securities that is regularly rebalanced

With one year of performance under our belt, it is worthwhile comparing how the indexes did vs. their objectives and the back testing we conducted on each of them.  As expected, each index did what it was supposed to when it was supposed to; please take a look for yourself:


Response to a Biased Article on Structured Notes

I recently came upon a Seeking Alpha article by Alliance Bernstein titled Structured Notes: Read the Fine Print. The article expressed a fairly negative and, in my opinion, inaccurate view of structured investing based on an analysis of one structured note in particular. As an experienced structurer and trader prior to founding Exceed Investments, I’d like to help set the record straight.

The article analyzes a 5-year 28% buffered note on the S&P 500 as an example. While they do not share a link to the terms, the note is similar to, if not exactly the same, as this note.

First, let’s briefly consider what a structured note is and discuss its purpose.  Structured notes are an example of what I call “defined outcome” investments, which are options-based strategies that allow investors to shape a risk/ reward exposure to fit their personal objectives. In these strategies, market participation levels are preset. Therefore, the targeted downside participation is known in advance, as is the upside potential.



A New Way of Thinking: Defined Outcome Investing as a Means to Mitigate Aversions

The average investor defines and mitigates risk in ways that do not align neatly with classical financial theory. Deeply ingrained aversions to loss, risk and ambiguity often lead to investment decisions that clash with the imperative of maximizing risk-adjusted returns. Indeed, a growing body of research in behavioral finance confirms that cognitive biases can materially and adversely affect portfolio performance.

But no amount of research will transform how and why human investors make decisions. Ultimately, the typical investor wants more security, predictability and transparency than has traditionally been available in the marketplace. That unmet need results in a disconnect between portfolio performance optimization and investor behavior.  A solution can be found in defined outcome investing strategies.

Follow this link to access the full white paper.


Joe Halpern Published in Bloomberg: Currency Hedged: ETFs vs Structured Notes

I recently had the opportunity to provide a “deconstructed note” column for one of Bloomberg’s periodicals – the Bloomberg Brief, April 30 2015 edition. In the article, I compare currency hedged ETFs to a popular structured note following a global basket of indexes and offering currency hedging. While content at Bloomberg Brief is typically behind a paywall, the editors at Bloomberg were kind enough to provide a link for our readers to access:

Guest Commentary: Favorable Forwards Make Currency-Hedged Notes Look Enticing