Envestnet Launches Customizable Options Strategy, Helping Investors Harvest the Volatility Risk Premium and Mitigate the Risk of Concentrated Stock Positions
Envestnet (ENV) has launched an Options Strategy Quantitative Portfolio (QP) to help investors manage concentrated stock positions. The strategy offers three options-based hedging solutions: Covered Calls, Protective Puts, and Collar Strategies, designed to generate income and mitigate risks while spreading taxable gains over multiple years. The solution, developed by QRG Capital Management, allows customization through a digital survey integrated into the Envestnet platform. The QRG suite of QPs has shown 40% annual growth in accounts and advisors over three years, with over $12 billion in assets under management as of Q2 2024.
Envestnet (ENV) ha lanciato un Portafoglio di Strategia Options Quantitative (QP) per aiutare gli investitori a gestire posizioni azionarie concentrate. La strategia offre tre soluzioni di copertura basate su opzioni: Covered Calls, Protective Puts e Collar Strategies, progettate per generare reddito e mitigare i rischi, distribuendo i guadagni tassabili su più anni. La soluzione, sviluppata da QRG Capital Management, consente la personalizzazione tramite un sondaggio digitale integrato nella piattaforma di Envestnet. Il pacchetto di QP di QRG ha mostrato una crescita annuale del 40% in conti e consulenti nel corso di tre anni, con oltre 12 miliardi di dollari in beni in gestione a partire dal secondo trimestre del 2024.
Envestnet (ENV) ha lanzado un Portafolio de Estrategia Cuantitativa de Opciones (QP) para ayudar a los inversores a gestionar posiciones de acciones concentradas. La estrategia ofrece tres soluciones de cobertura basadas en opciones: Covered Calls, Protective Puts y Collar Strategies, diseñadas para generar ingresos y mitigar riesgos mientras distribuyen las ganancias imponibles a lo largo de varios años. La solución, desarrollada por QRG Capital Management, permite la personalización a través de una encuesta digital integrada en la plataforma de Envestnet. El conjunto de QP de QRG ha mostrado un crecimiento anual del 40% en cuentas y asesores durante tres años, con más de 12 mil millones de dólares en activos bajo gestión a partir del segundo trimestre de 2024.
엔베스트넷(ENV)은 집중 주식 포지션을 관리하기 위해 옵션 전략 정량 포트폴리오(QP)를 출시했습니다. 이 전략은 수익을 창출하고 위험을 완화하며 과세 가능한 수익을 여러 해에 걸쳐 분산시키기 위해 설계된 세 가지 옵션 기반 헤지 솔루션을 제공합니다: Covered Calls, Protective Puts, 그리고 Collar Strategies. QRG 캐피털 매니지먼트가 개발한 이 솔루션은 엔베스트넷 플랫폼에 통합된 디지털 설문조사를 통해 사용자 맞춤 설정을 허용합니다. QRG의 QP 세트는 지난 3년 동안 계좌 및 자문사에서 40%의 연간 성장을 보였으며, 2024년 2분기 기준 120억 달러 이상의 자산을 관리하고 있습니다.
Envestnet (ENV) a lancé un Portefeuille de Stratégie d'Options Quantitatives (QP) pour aider les investisseurs à gérer des positions en actions concentrées. La stratégie propose trois solutions de couverture basées sur des options : Covered Calls, Protective Puts et Collar Strategies, conçues pour générer des revenus et atténuer les risques tout en répartissant les gains imposables sur plusieurs années. La solution, développée par QRG Capital Management, permet la personnalisation via une enquête numérique intégrée à la plateforme Envestnet. L'ensemble de QP de QRG a montré une croissance annuelle de 40 % des comptes et des conseillers au cours des trois dernières années, avec plus de 12 milliards de dollars d'actifs sous gestion à partir du deuxième trimestre 2024.
Envestnet (ENV) hat ein quantitatives Optionsstrategie-Portfolio (QP) ins Leben gerufen, um Investoren zu helfen, konzentrierte Aktienpositionen zu verwalten. Die Strategie bietet drei auf Optionen basierende Hedging-Lösungen an: Covered Calls, Protective Puts und Collar Strategies, die darauf abzielen, Einkommen zu generieren und Risiken zu mindern, während steuerpflichtige Gewinne über mehrere Jahre verteilt werden. Die Lösung, die von QRG Capital Management entwickelt wurde, ermöglicht eine Anpassung über eine digitale Umfrage, die in die Envestnet-Plattform integriert ist. Die QP-Suite von QRG hat in den letzten drei Jahren ein jährliches Wachstum von 40 % bei Konten und Beratern gezeigt, mit über 12 Milliarden Dollar an verwalteten Vermögenswerten im zweiten Quartal 2024.
- 40% annual growth in accounts and advisors over past three years
- $12 billion in assets under management/administration as of Q2 2024
- Launch of new customizable options strategy product expanding service offerings
- None.
Insights
The launch of Envestnet's Options Strategy QP represents a significant enhancement to their wealth management platform. The three-pronged approach (covered calls, protective puts and collar strategies) offers sophisticated options solutions for managing concentrated stock positions - a common challenge for high-net-worth investors.
The platform's integration of systematic risk management with tax-efficient liquidation strategies addresses a important market need. With
This product launch strategically positions Envestnet to capture growing demand for personalized wealth management solutions. The timing is particularly relevant given current market volatility and the increasing need for tax-efficient investment strategies. The systematic, rules-based approach to harvesting volatility premium could provide a sustainable revenue stream for Envestnet while addressing client needs for risk management.
The integration into their existing platform, which serves as one of the largest direct index SMA providers, creates significant cross-selling opportunities. The
New Options Strategy Quantitative Portfolio (QP) is the Latest Solution to Emerge from Envestnet Affiliate QRG's Systematic Approach to Investment Management
Advisors can Offer a Personalized Solution for Mitigating the Risk of a Concentrated Stock Holding, While Offsetting Capital Gains, Over Multiple Years
"Envestnet is focused on delivering solutions that can be customized to address any number of requirements within an investor's portfolio," said Dana D'Auria, Co-Chief Investment Officer and Group President of Envestnet Solutions. "This new Options QP strategy, which will allow advisors to build better portfolios around low-cost basis shares and other investment needs, is a great addition to our suite of personalized solutions."
Investors may find themselves with concentrated stock positions for a number of reasons, such as an inheritance, a large stock position granted by a company, shares from a business sale, or simply loyalty to a long-term holding. This can expose them to loss if the company underperforms and its stock drops. For investors holding a concentrated position in less liquid or closely held stocks, sometimes selling the position without moving the market or finding buyers can be difficult when trying to exit the position. Furthermore, selling a concentrated position in a stock that has seen strong appreciation may trigger significant taxes. Consequently, many investors will delay or avoid selling to defer taxes leading to a prolonged concentrated position, further exacerbating the risk.
Developed by Envestnet's quantitative asset management unit, QRG Capital Management, Inc. (QRG), the new strategy offers investors three options-based hedging solutions that can help generate income from and/or mitigate the risk of a concentrated position while spreading out taxable gains over a multi-year time span. More information about the Options Strategy QP is available at https://www.envestnet.com/qrg/strategies/options.
"In keeping with Envestnet's ongoing commitment to innovation and addressing investor needs, we have created a broad, scalable solution which can be customized to help individual investors optimize the income from concentrated stock positions," said Brandon Thomas, Co-Founder and Co-Chief Investment Officer of Envestnet. "The Options Strategy QP is underpinned by the robust, quantitative methodology and dedicated support the industry has come to expect from us—and is designed to help advisors and their clients take advantage of options-based strategies on their terms, in ways that they are most comfortable pursuing."
A Customizable Options Strategy
Options are derivative securities where a buyer agrees to pay a premium to the seller for the right to buy or sell the securities at a specific price within a certain timeframe. The seller then collects a premium for granting the buyer the right to sell the security for them.
Financial advisors that utilize the Options Strategy QP can fill out a personalized digital survey, built into the Envestnet platform, which asks questions designed to help them understand and feel comfortable with this type of complex strategy. The information provided by clients in the questionnaire can help them work together with their advisors to identify the best approach within the Options Strategy QP:
- Covered Calls—Call options enable the buyer of the option to buy the underlying asset at the strike price of the option by the expiration date, and require the seller of the option to sell that underlying asset. Covered calls entail selling call options to cover an investor's shares of the existing stock position, in order to generate more income and mitigate downside risk.
- Protective Puts—Put options allow the option buyer to sell the underlying asset at the option's strike price by the expiration date, and require the option seller to buy the underlying asset. A protective put strategy involves two positions—the long-put option and shares of the underlying stock. The profit from the put option can directly offset the decline of the stock price below the strike price when the option expires.
Crucially, the Options Strategy QP's protective put approach can be customized by investors and their advisors by desired downside protection, number of shares to hedge, and the projection's time horizon. - Collar Strategies—These approaches, which involve buying a put and selling a call on the shares of the underlying stock, are designed to deliver downside protection at a lower cost by financing the purchase of put options with income generated from call options. The QRG collar strategy within the Options Strategy QP adheres to the client's desired risk tolerance while generating income in a customizable way.
"Our rules-based process is key to helping high-net-worth investors potentially increase returns from concentrated stock holdings through strategic liquidation, while reducing risk and offsetting taxable gains," said Hunter Willis, CFA, Portfolio Manager for Envestnet's Quantitative Research Group. "We don't just accept the outcome of a position—we look to optimize returns by utilizing stock-specific inputs designed to capture the volatility risk premium in each stock option."
The QRG suite of QPs is designed to combine the benefits of beta investing with the portfolio customization of managed accounts. Envestnet offers Market Series, Factor-Enhanced, Sustainable, and Fixed Income QPs to help investors strengthen after-tax and risk-adjusted outcomes in a cost-effective manner. Envestnet's suite of QPs has generated annual growth of 40 percent in accounts and advisors over the past three years. First introduced in 2013, the QRG QP offering consisted of more than
About Envestnet
Envestnet is helping to lead the growth of wealth managers and transforming the way financial advice is delivered through its ecosystem of connected technology, advanced insights, and comprehensive solutions—backed by industry-leading service and support. Serving the wealth management industry for 25 years with more than
Envestnet refers to the family of operating subsidiaries of the public holding company, Envestnet, Inc. (NYSE: ENV). For a deeper dive into how Envestnet is shaping the future of financial advice, visit www.envestnet.com. Stay connected with us for the latest updates and insights on LinkedIn and X (@ENVintel).
Disclosure
Nothing contained in this document is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. Investing carries certain risks and there is no assurance that investing in accordance with the portfolios or strategies mentioned will provide positive performance over any period of time. Investors could lose money if they invest in accordance with the portfolios or strategies discussed herein. Past performance is not indicative of future results.
Option trading involves a significant degree of risk, which each prospective investor should seriously consider. The risk of loss in trading options can be substantial and options are not suitable for all investors. Prospective clients should carefully consider whether such trading is suitable for them in light of their financial condition and individual risk tolerances. The high degree of leverage that is often obtainable in options trading can work against investors as well as for them. More information on the risks of buying and selling options contracts can be found on the CBOE's website at https://www.theocc.com/company-information/documents-and-archives/publications
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Amy Norcini
Envestnet
amy.norcini@envestnet.com
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SOURCE Envestnet, Inc.
FAQ
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