Fixed Income portfolio can suffer sudden loss due to by inflation or currency depreciation. If you have large investment in this asset class, a portion of the interest earned can be invested in out-of-the-money gold calls. This is a cheap way to protect your asset. How to protect diversified portfolio? You can diversify by owning bonds as well as stock; owning small, midsized and large companies; and by owning different funds, some of which some are value oriented, while others are growth oriented. More sophisticated approach will be to use Commodity fund and Hedge funds. Commodity index fund is a good alternative asset class to reduce over all risk of a diversified portfolio. You can follow any one of the following option to protect down slide of your investment a. Purchasing out-of-the-money puts and calls, for very small sums of money, and be
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