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What's Downside protection?
Active management metrics explained
Downside protection on investment occurs when techniques are employed to mitigate or prevent a decrease in the value of the investment. Downside protection is a common objective for investors and fund managers to avoid losses, and several instruments or methods can be used to achieve this goal.


  • Downside protection is meant to provide a safety net if an investment starts to fall in value.
  • Protection from losses can also be achieved through diversification or stop-loss orders.
  • Protecting an entire portfolio from losses may not make sense depending on how much the protection costs and when the investments are expected to be cashed in.
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