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Portfolio Insurance
What Does Portfolio Insurance Mean?
1. A method of hedging a portfolio of stocks against the market risk by short selling stock index futures.
2. Brokerage insurance such as the Securities Investor Protection Corporation (SIPC).
Investopedia explains Portfolio Insurance
1. This hedging technique is frequently used by institutional investors when the market direction is uncertain or volatile. Short selling index futures can offset any downturns, but it also hinder any gains.
2. SIPC is an insurance that provides brokerage customers up to $500,000 coverage for cash and securities held by a firm.
Related Links
- Futures Fundamentals - For those who are new to futures but want a solid understanding of them, this tutorial explains what futures contracts are, how they work and why investors use them.
- A Beginner's Guide To Hedging - Learn how investors use strategies to reduce the impact of negative events on investments.
- Special Feature: Mutual Funds - Mutual funds are an inexpensive and easy way to benefit from diversification and professional management. See our mutual fund feature for everything you need to know.
- Coattail
Investor - Explore what stocks the world's top mutual funds and portfolio
managers hold!
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