Harvard Case - Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance
"Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance" Harvard business case study is written by er Tufano, Barbara B. Kyrillos. It deals with the challenges in the field of Finance. The case study is 23 page(s) long and it was first published on : Feb 9, 1994
At Fern Fort University, we recommend that Leland O'Brien Rubinstein Associates, Inc. (LOR) adopt a strategy of portfolio insurance to manage the risk of their clients' portfolios. This strategy involves using financial derivatives, specifically options, to create a hedge against potential market downturns. By implementing this strategy, LOR can provide their clients with a more stable and predictable return on their investments, ultimately enhancing their financial well-being and risk management capabilities.
2. Background
Leland O'Brien Rubinstein Associates, Inc. (LOR) is an investment management firm specializing in providing investment advice and managing portfolios for high-net-worth individuals and institutions. In 1987, LOR faced a significant challenge as the stock market experienced a sharp decline, leading to substantial losses for their clients. This event prompted LOR to explore new strategies to protect their clients' investments from similar market volatility in the future.
The main protagonists of the case are:
- Leland O'Brien: Founder and CEO of LOR, who is responsible for the firm's overall strategy and direction.
- Rubinstein: A partner at LOR who is responsible for developing and implementing investment strategies.
- The clients: High-net-worth individuals and institutions who rely on LOR for investment advice and portfolio management.
3. Analysis of the Case Study
The case study highlights the increasing need for risk management in the investment industry. The 1987 market crash demonstrated the vulnerability of traditional investment strategies to sudden market downturns. To address this challenge, LOR explored the concept of portfolio insurance.
Portfolio insurance utilizes financial derivatives, specifically options, to create a hedge against market losses. By selling call options and buying put options, investors can create a strategy that limits potential losses while preserving potential upside gains. This approach allows investors to maintain exposure to the market while mitigating the risk of significant losses during market downturns.
Financial analysis of the case reveals that LOR's clients were primarily concerned with preserving capital and achieving consistent returns. Portfolio insurance offered a potential solution by providing a defined downside risk while still allowing for potential upside gains.
Key considerations for LOR in implementing portfolio insurance include:
- Cost of the strategy: Implementing portfolio insurance involves the purchase of options, which can be expensive.
- Complexity of the strategy: Portfolio insurance requires a deep understanding of financial derivatives and their application in portfolio management.
- Potential for losses: While portfolio insurance aims to limit losses, it does not guarantee against them.
4. Recommendations
To effectively implement portfolio insurance, LOR should take the following steps:
- Educate clients: LOR should provide comprehensive education to their clients about portfolio insurance, explaining its benefits, risks, and potential limitations.
- Develop a robust risk management framework: LOR should establish a thorough risk management framework that includes clear guidelines for selecting and managing options strategies.
- Partner with specialists: LOR should consider partnering with specialized financial institutions or consultants with expertise in options trading and portfolio insurance.
- Monitor and adjust: LOR should continuously monitor the performance of portfolio insurance strategies and make adjustments as needed based on market conditions and client objectives.
5. Basis of Recommendations
The recommendations are based on the following considerations:
- Core competencies and consistency with mission: Portfolio insurance aligns with LOR's core competency in investment management and its mission to provide clients with sound financial advice and risk management solutions.
- External customers and internal clients: Portfolio insurance addresses the needs of LOR's clients who seek to protect their investments from market volatility.
- Competitors: Implementing portfolio insurance positions LOR as a leader in the industry, offering a differentiated service to clients compared to competitors.
- Attractiveness ' quantitative measures: The attractiveness of portfolio insurance can be measured through risk-adjusted returns, volatility reduction, and potential for capital preservation.
6. Conclusion
By adopting a portfolio insurance strategy, LOR can enhance its risk management capabilities, provide clients with more stable and predictable returns, and solidify its position as a leading investment management firm. This approach aligns with the evolving needs of high-net-worth individuals and institutions who seek to navigate the complexities of the financial markets while protecting their investments.
7. Discussion
Other alternatives:
- Traditional asset allocation: LOR could continue to rely on traditional asset allocation strategies, but this approach does not provide specific protection against market downturns.
- Passive investing: LOR could recommend passive investing strategies, such as index funds, which offer diversification but may not provide the same level of risk management as portfolio insurance.
Risks and key assumptions:
- Market volatility: The effectiveness of portfolio insurance depends on the level of market volatility. In highly volatile markets, the cost of options may be higher, and the strategy may not be as effective.
- Options pricing: The pricing of options can be complex and subject to fluctuations. LOR must have a deep understanding of options pricing models and the factors that influence them.
- Liquidity: The liquidity of options can vary depending on the underlying asset and market conditions. LOR must ensure that they can readily buy and sell options as needed.
8. Next Steps
To implement the recommended portfolio insurance strategy, LOR should take the following steps:
- Within 3 months: Develop a comprehensive educational program for clients about portfolio insurance.
- Within 6 months: Establish a robust risk management framework for options trading and portfolio insurance.
- Within 9 months: Partner with specialized financial institutions or consultants to provide expertise in options trading and portfolio insurance.
- Ongoing: Continuously monitor the performance of portfolio insurance strategies and make adjustments as needed.
By taking these steps, LOR can effectively implement portfolio insurance and enhance its ability to manage risk and deliver value to its clients.
Hire an expert to write custom solution for HBR Finance case study - Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance
- Financial Detective
- Ameritor Mutual Funds Dead Man Funds
- Hedge Fund Due Diligence Leman Alternative Asset Management Company
- Pittinos Financial Advisors Llc
- Rudy Wong Investment Advisor
- Tad Omalley Investment Conundrum
- Highimpact Wealth Management Tom Deena Li Plan Retirement
- Darden Capital Management Cavalier Fund
- Hardina Smythe Healthcare Investment Conundrum
- Bill Miller Value Trust
- Harvard Management Co
- Keller Funds Option Investment Strategies
Case Description
Leland O'Brien Rubinstein Associates, a small financial advisory firm founded in 1980, has created a successful business by selling a product commonly known as portfolio insurance. Portfolio insurance is a trading strategy that institutional investors use to establish a floor on the value of their equity portfolios, by essentially manufacturing a put option on a broad market index. The crash of 1987 highlights the flaws of this manufacturing process and forces principals of LOR to consider what to do next.
🎓 Struggling with term papers, essays, or Harvard case studies? Look no further! Fern Fort University offers top-quality, custom-written solutions tailored to your needs. Boost your grades and save time with expertly crafted content. Order now and experience academic excellence! 🌟📚 #MBA #HarvardCaseStudies #CustomEssays #AcademicSuccess #StudySmart Write my custom case study solution for Harvard HBR case - Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance
Hire an expert to write custom solution for HBR Finance case study - Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance
Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance FAQ
What are the qualifications of the writers handling the "Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance" case study?
Our writers hold advanced degrees in their respective fields, including MBAs and PhDs from top universities. They have extensive experience in writing and analyzing complex case studies such as " Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance ", ensuring high-quality, academically rigorous solutions.
How do you ensure confidentiality and security in handling client information?
We prioritize confidentiality by using secure data encryption, access controls, and strict privacy policies. Apart from an email, we don't collect any information from the client. So there is almost zero risk of breach at our end. Our financial transactions are done by Paypal on their website so all your information is very secure.
What is Fern Fort Univeristy's process for quality control and proofreading in case study solutions?
The Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance case study solution undergoes a rigorous quality control process, including multiple rounds of proofreading and editing by experts. We ensure that the content is accurate, well-structured, and free from errors before delivery.
Where can I find free case studies solution for Harvard HBR Strategy Case Studies?
At Fern Fort University provides free case studies solutions for a variety of Harvard HBR case studies. The free solutions are written to build "Wikipedia of case studies on internet". Custom solution services are written based on specific requirements. If free solution helps you with your task then feel free to donate a cup of coffee.
I’m looking for Harvard Business Case Studies Solution for Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance. Where can I get it?
You can find the case study solution of the HBR case study "Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance" at Fern Fort University.
Can I Buy Case Study Solution for Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance & Seek Case Study Help at Fern Fort University?
Yes, you can order your custom case study solution for the Harvard business case - "Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance" at Fern Fort University. You can get a comprehensive solution tailored to your requirements.
Can I hire someone only to analyze my Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance solution? I have written it, and I want an expert to go through it.
🎓 Struggling with term papers, essays, or Harvard case studies? Look no further! Fern Fort University offers top-quality, custom-written solutions tailored to your needs. Boost your grades and save time with expertly crafted content. Order now and experience academic excellence! 🌟📚 #MBA #HarvardCaseStudies #CustomEssays #AcademicSuccess #StudySmart Pay an expert to write my HBR study solution for the case study - Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance
Where can I find a case analysis for Harvard Business School or HBR Cases?
You can find the case study solution of the HBR case study "Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance" at Fern Fort University.
Which are some of the all-time best Harvard Review Case Studies?
Some of our all time favorite case studies are -
Can I Pay Someone To Solve My Case Study - "Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance"?
Yes, you can pay experts at Fern Fort University to write a custom case study solution that meets all your professional and academic needs.
Do I have to upload case material for the case study Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance to buy a custom case study solution?
We recommend to upload your case study because Harvard HBR case studies are updated regularly. So for custom solutions it helps to refer to the same document. The uploading of specific case materials for Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance ensures that the custom solution is aligned precisely with your needs. This helps our experts to deliver the most accurate, latest, and relevant solution.
What is a Case Research Method? How can it be applied to the Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance case study?
The Case Research Method involves in-depth analysis of a situation, identifying key issues, and proposing strategic solutions. For "Leland O'Brien Rubinstein Associates, Inc.: Portfolio Insurance" case study, this method would be applied by examining the case’s context, challenges, and opportunities to provide a robust solution that aligns with academic rigor.
"I’m Seeking Help with Case Studies,” How can Fern Fort University help me with my case study assignments?
Fern Fort University offers comprehensive case study solutions, including writing, analysis, and consulting services. Whether you need help with strategy formulation, problem-solving, or academic compliance, their experts are equipped to assist with your assignments.
Achieve academic excellence with Fern Fort University! 🌟 We offer custom essays, term papers, and Harvard HBR business case studies solutions crafted by top-tier experts. Experience tailored solutions, uncompromised quality, and timely delivery. Elevate your academic performance with our trusted and confidential services. Visit Fern Fort University today! #AcademicSuccess #CustomEssays #MBA #CaseStudies
How do you handle tight deadlines for case study solutions?
We are adept at managing tight deadlines by allocating sufficient resources and prioritizing urgent projects. Our team works efficiently without compromising quality, ensuring that even last-minute requests are delivered on time
What if I need revisions or edits after receiving the case study solution?
We offer free revisions to ensure complete client satisfaction. If any adjustments are needed, our team will work closely with you to refine the solution until it meets your expectations.
How do you ensure that the case study solution is plagiarism-free?
All our case study solutions are crafted from scratch and thoroughly checked using advanced plagiarism detection software. We guarantee 100% originality in every solution delivered
How do you handle references and citations in the case study solutions?
We follow strict academic standards for references and citations, ensuring that all sources are properly credited according to the required citation style (APA, MLA, Chicago, etc.).