Too Many Challenges for Equity Markets: La Côte Invest Now Hedging 50% of Its Equity Exposure

The equity markets have shown remarkable resilience in the face of ongoing global challenges. However, several factors continue to pose risks:

• A tariff war initiated by the U.S. against the rest of the world, with uncertain consequences for prices and supply chains.

• The U.S. economy is starting to show signs of weakness amid global economic uncertainties.

• The independence of the Federal Reserve is under threat, which could lead to higher long-term interest rates.

• Valuations remain relatively high, offering limited upside potential.

A slowing global economy, rising long-term rates, and diminishing independence of critical institutions like the Fed and the Bureau of Economic Analysis are all negative developments.

In response to these challenges, we have decided to hedge 50% of our global equity exposure for our enhanced strategies (SE). We are implementing a Put Spread strategy with a lookback feature, ensuring that half of our equity portfolios are hedged between -5% and -20% from the highest index level recorded between now and November.

Put Spread

Put Spread, Underlying, Combination