The old way: protection at the expense of performance
Buffer and defined outcome funds have attracted a lot of attention and substantial inflows of money over the past few years. Brandywine Asset Management insists they are already obsolete. That is because although those funds do reduce market risk, they do so at the great cost of reduced performance. Buffer funds provide protection but they sell calls that cap upside at a predefined level.
The new way: protection that increases performance
Brandywine doesn't provide protection at the expense of performance. Since their launch in 2023, the performance of Brandywine’s domestic equity strategies has placed them among all top-performing funds, with more than 2% annualized outperformance and 25% less risk relative to their peer groups. That’s not just one hot fund. That’s the average across Brandywine’s entire U.S. equity fund suite of six investment strategies.
What is Brandywine Doing Different?
Like buffer funds, Brandywine's funds are 1 part beta exposure and 1 part put options. However, where they differ is in the 3rd piece. Buffer funds sell calls to try and make up for the cost of the put options. Brandywine instead invests their 3rd portion in a basket of proprietary strategies that they have developed over their 40 year history. This has been successful in paying for the cost of the puts, without capping upside. The result, upside that matches and even outperforms in bull markets, with drawdowns that are reduced by 30%. They coined this strategy "Risk Replacement".
Michael Dever, Brandywine’s founder and co-portfolio manager, states it clearly, “When risk mitigation funds such as buffer and defined outcome funds were introduced, they were the only option advisors and investors had to maintain market exposure with downside protection. With Brandywine’s innovation of ‘Risk Replacement’ that is no longer the case. All those investments can be replaced with Brandywine’s Funds to provide investors with both reduced risk and increased returns”
Brandywine is now launching an ETF suite to bring this performance to all wealth managers and their investors. Learn more at https://brandywine.com or by contacting Brandywine directly at matt@brandywine.com.
About Brandywine Asset Management
Founded in 1982, Brandywine Asset Management has a long history of investment research, innovation and trading. This includes Brandywine’s development of Return Driver based investing in the 1990s, which was described in Michael Dever’s best-selling book Jackass Investing: Don’t do it. Profit from it., and Risk Replacement, which serves as the basis for the Brandywine Enhanced Strategies. Over the past four decades, some of the world’s largest investors, including money center banks, corporate pension plans, hedge funds and large family offices have entrusted their money to Brandywine.
