portfolio insurance

Portfolio insurance

A strategy using a leveraged portfolio in the underlying stock to create a synthetic put option. The strategy's goal is to ensure that the value of the portfolio does not fall below a certain level.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.

Portfolio Insurance

A strategy used to protect against potential losses to a portfolio. For example, one may short sell futures contracts on securities in a portfolio where one makes a profit if the securities decrease in price. Alternatively, one may buy put options allowing one to sell the securities at a predetermined price regardless of market movements. See also: Hedge.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved

portfolio insurance

The futures or option contracts that serve to offset in whole or in part changes in the value of a portfolio. For example, a portfolio manager might sell short stock-index futures to hedge an expected decline in the market value of a portfolio.
Wall Street Words: An A to Z Guide to Investment Terms for Today's Investor by David L. Scott. Copyright © 2003 by Houghton Mifflin Company. Published by Houghton Mifflin Company. All rights reserved. All rights reserved.
References in periodicals archive ?
The portfolio insurance provisions consist of the following: 77% of the portfolio uninsured with loan-to-value ratios of 80% or lower; 8% of the portfolio privately insured, 8% insured by Rural Development, and 7% securitized mortgage-backed securities.
The high valuation levels were at least in part due to excessive risk taking brought on by the promises of a security blanket called portfolio insurance. Portfolio insurance is the primary culprit for what made Black Monday worthy of its name.
Portfolio insurance is a strategy that sold stock futures into a falling market to control risk.
Intended for graduate students, the second volume in the financial engineering series from Ajou University presents real options models of mathematical finance applied to capital investment theory, risk aversion, mutual insurance, and dynamic portfolio insurance. The 12 chapters also survey recent developments in optimal stopping under ambiguity, principal-agent problems in continuous time, nonlinear expectation theory under Knightian uncertainty, and credit risk models.
Financial institutions normally group together mortgages and purchase portfolio insurance to facilitate their securitisation at a later date.
Insurance cover is currently inadequate for two categories of risks: for exporting SMEs with annual export turnover of 2 million at most, and for single risk cover for risks associated with a single export transaction not covered by portfolio insurance from private insurers or cases where the cover is or includes pre-credit risk.
Portfolio insurance strategies allow the investor to control downside risk, while benefiting from market rises.
It offers a wide range of fixed-income securities, federally insured CD portfolio insurance analysis, BondEdge portfolio analysis reports at no cost, portfolio accounting services through SunGard and prime brokerage accounts.
According to the second policy, they purchase an appropriately structured portfolio insurance policy.
Blume, 1985, "On the Optimality of Portfolio Insurance", Journal of Finance, 40:1341-1352

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