Safety cushion

Safety cushion

In a contingent immunization strategy, the difference between the initially available immunization level and the safety-net return.

Safety Cushion

In a contingent immunization strategy, the difference between a portfolio's value and the agreed-upon safety net return. A contingent immunization strategy prescribes an actively managed portfolio that is risk tolerant until a series of bad investments brings the return on the portfolio down to a certain level, known as the safety net. At that point, the portfolio becomes risk averse. Thus, the safety cushion is the amount in investment that the money manager may lose before he/she is required to change the goal of the portfolio from capital gain to capital protection.