The constant proportion portfolio insurance or CPPI strategy is one of the strategies often used by fund managers in funds which offer some kind of capital protection.  To me, it is not a good strategy because it often yields unsatisfactory results. This is how it works: in a CPPI strategy, the portfolio is invested in safe and risky assets. When the market is moving in an uptrend, more money is channeled to the risky assets. That is to say that the percentage in risky assets increases during the bull market. When the market is in a downtrend, risky assets will be sold so as to reduce the percentage invested in the risky asset. If the market continues to be in a downtrend, the percentage invested in the risky asset approaches zero. That is ...