Guardrail Strategies
Consistent Income with Loss Limits
Durable income with a defined floor.
- Objective
- 6% distributions for life
- Downside
- 15% loss cap / 6 months
The problem
Clients who need to live off their portfolio face a hard trade-off: chase yield and take on hidden drawdown risk, or sit in cash and watch purchasing power erode. Neither funds a retirement that could last thirty years.
How it works
Blend the income sources
Dividend equities, investment-grade and corporate credit, and bonds form a diversified income base rather than relying on any single sleeve.
Write covered calls
Option premium on the equity sleeve adds a second income stream and cushions the downside.
Cap the loss
A defined floor limits drawdown over a rolling six-month window, so the distribution is built to survive a bad market.
What’s inside
Dividend equities
Quality, cash-generative names selected for distribution durability.
Corporate credit & bonds
Investment-grade and corporate fixed income for baseline yield.
Covered calls
Premium income written against the equity sleeve.
Who it’s for
- Retirees and near-retirees who need durable, livable income.
- Advisors managing decumulation who want a defined downside.
- Clients seeking yield without naked single-stock or duration risk.
Common questions
Is the 6% distribution guaranteed?
No. It is a target distribution rate, not a guarantee. Distributions depend on market conditions and the underlying holdings. See the disclosure below.
How is the loss cap enforced?
Through option collars and position sizing that define the worst-case drawdown over a rolling six-month window. Caps are objectives, not guarantees of principal.
Is it tax-efficient?
Income is generated inside a managed structure rather than through repeated taxable liquidations. Tax outcomes are client-specific — consult a tax professional.
Request details on Consistent Income.
For RIAs and institutional investors evaluating option-based model portfolios.
Contact Us →Other Guardrail strategies
Core Growth with Loss Limits
10%+ target return
Growth Equity with Loss Limits
~90% of QQQ long-term return
Target returns, distribution rates, and drawdown figures are objectives, not guarantees. All investing involves risk, including possible loss of principal. Past performance is not indicative of future results. Option strategies are not suitable for all investors. Nothing herein is an offer, a recommendation, or tax, legal, or investment advice. Yayati Asset Management is a Registered Investment Adviser; see Form ADV for details.