Risk Mitigating Strategies (RMS) Framework

Meketa

Ryan Lobdell, Jason Josephiac, Brian Dana

Research

10 Pages

Meketa Investment Group lays out a risk mitigating strategies framework that groups defensive tools by how they behave in equity stress. The paper explains how first responders, second responders, and diversifiers can be combined to protect against both sudden shocks and extended drawdowns while still contributing over full cycles. It also highlights trade offs among cost, reliability, convexity, and capital efficiency when designing an allocation.

Key Takeaways

Functional RMS design: Organizing strategies by role clarifies expectations and helps align defensive tools with specific portfolio objectives.
Layered crisis protection: First and second responders target different drawdown patterns so protection is not tied to a single market scenario.
Diversifiers support growth: Uncorrelated strategies aim to smooth returns and keep the overall portfolio invested through a range of environments.
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