Tradition. Innovation. Results.


Swan Defined Risk Strategy


Inception: 1997

Benchmark: S&P 500

Sean M. Nimmo

Sean M. Nimmo

Vice President

Experience: 15 years


Mr. Nimmo serves as Vice President and interacts directly with clients. He is also affiliated with CCM Opportunistic Advisors LLC where he serves as Managing Director and Chief Compliance Officer for an alternative investment platform focused on identifying and investing with emerging managers.


Prior to joining the Chilton Capital Management team in 2010, Mr. Nimmo assisted investors in evaluating investment opportunities with Credit Suisse and Lehman Brothers.


Mr. Nimmo received his BA in Economics from the University of Texas and has an MBA from Rice University.

Investment Philosophy


The Swan Defined Risk Strategy (DRS) philosophy is grounded upon the belief that market timing and stock selection investment strategies cannot provide superior returns over the long-term and that asset allocation is limited in its ability to protect capital from catastrophic risk. The DRS emerged out of a desire to find an investment approach which could allow someone to benefit from an investment in the equities market while reducing the risks inherent in equities investing.


This philosophy or belief was stated at the inception of the DRS in 1997:


“The great claim of asset allocation is that risk can be reduced by diversifying over several broad asset classes (i.e. stocks, bonds, cash and real estate) without a similar reduction in return. This risk reduction is, however, strictly theoretical (typically based upon relationships that existed over a particular period). There is no guarantee that these same relationships will continue in the future. This is the crux of where asset allocation or modern portfolio theory breaks down. Risk is not defined; instead it is merely expressed in historical standards.”

—Randy Swan, founder and CEO of Swan Wealth Advisors


Investment Goals


The DRS was designed to avoid the inherent difficulties of selecting individual stocks for investment, timing the overall market, and the vulnerabilities inherent in passive asset allocation investment strategies. Specifically, the DRS was designed to protect against systemic or market risk. Even well-diversified portfolios can be hurt when all the components decline at the same time. The goal of the DRS is not to outperform the broad market indices on the upside but rather to outperform over an entire investment cycle which includes periods of wide-spread equity market declines. In actual trading, which began in mid-1997, the DRS has been able to accomplish our primary goal of allowing investors to participate in bullish equity market gains while protecting capital from the market’s inherent potential to decline. (No representations about future performance are being made in this observation.)


While we cannot claim that the Swan DRS will outperform the market in any particular time frame, it was designed to provide significant downside protection. Protecting against downside risk turns out to be one of the best ways to outperform the market over a longer time frame. In order to provide significant downside protection the DRS tends to underperform the broader market on the upside (excluding the option income trades). Historically, the DRS has captured about 70% of the upside when including the option income but only 5% of the downside.

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