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Miles Capital Launches Fund Of Alternative Funds

The recently launched Miles Capital Alternatives Advantage Fund has an interesting approach to multialternative investing: it gains its exposures by bundling other alternative mutual funds and ETFs. The fund, which launched on March 14, is available in N (MUTF: MILNX ) and I (MUTF: MILIX ) share classes, with respective net-expense ratios of 3.24% and 2.99% (this includes 1.24% of acquired fund fees from the underlying funds), and initial investment minimums of $2,500 and $50,000. Allocation Across Multiple Strategies The Miles Capital Alternative Advantage Fund’s investment objective is to provide long-term capital returns with less volatility than U.S. equity markets. It pursues this end by means of investing in mutual funds and ETFs employing the following strategies: Long/short equity Long/short credit Market neutral Arbitrage Global macro Moreover, the fund may invest in mutual funds and ETFs that bundle alternative assets, in addition to strategies. These assets may include commodities and commodity-linked instruments, currencies, real estate and other real assets, and illiquid private placements and distressed assets. For more information, read the fund’s prospectus . Fund of Funds Approach Although the “fund of funds” approach is common among hedge funds, “funds of alternative mutual funds and ETFs” are less so. Still, the Miles Capital Alternatives Advantage Fund isn’t the first. Three of the best performing funds from the group that came before it include: Of the three, CAALX is the largest in terms of assets under management (“AUM”), at $460 million. LPTAX was second, at $227 million AUM; while GASAX was the smallest, at $90 million AUM. How have these “funds of alternative funds” performed? In terms of their 3-year returns through February 29, CAALX was tops at +3.76%, which was good enough to rank in the top 7% of Morningstar’s Multialternative category. LPTAX’s 3-year returns stood at 2.73%, which put it in the top 15%. And GASAX returned 2.05% for the 3-year period ending Leap Day 2016, putting it in the top 23% of its peers. Past performance does not necessarily predict future results. Jason Seagraves contributed to this article.

Ideas For An Ultra-Low Volatility Index Part VII

Here are the Ultra-Low Volatility Index strategy’s rules. Buy the PowerShares S&P 500 Low Volatility Portfolio ETF (NYSEARCA: SPLV ) with 80% of the dollar value of the portfolio. Buy the Direxion Daily 30-Year Treasury Bull 3x Shares ETF (NYSEARCA: TMF ) with 20% of the dollar value of the portfolio. Rebalance annually to maintain the 80%/20% dollar value split between the positions. The index is very Zen in its elegance. We are combining the S&P 500 Low Volatility ETF with a 3x leveraged exposure to long duration government bonds, which acts as an imperfect hedge. Because of the leverage inherent in TMF, we can allocate more capital to SPLV. In addition, it is not necessary to have margin exposure. Personally, I think most investors want a portfolio that will tread water, hold its own, and only drop slightly when markets are going crazy. Low drawdowns and ultra-low volatility enable an investor to hang on and to actually enjoy the possibilities of the long term. For too long, people have had the pain theory of investing pounded into their head . Or as I like to call, it “The Bill Ackman School For Kids Who Can’t Read Financial Statements Good And Wanna Learn To Do Other Stuff Good Too.” Many of these “special people” (and let me be clear, by “special” I mean reckless and dumb) believe that in order to enjoy a decent return, that they first must endure the pain of having positions move against them, in order to eventually triumph in a grand quest for the truth of their own genius, against all odds. The pain theory of investing sounds very heroic and glamorous, but in reality, a smooth ride allows investors to hold on to their positions in order to enjoy the benefits of the long term. Why get shaken out, when you can have a smoother ride? And the smoother ride, in this case, has a higher return across a full bull/bear market cycle. Here are the index’s results: (click to enlarge) Click to enlarge (click to enlarge) Click to enlarge I will be the first to admit that this strategy is not brilliant or original. It’s just solid blocking and tackling. The current trend towards complexity in the investment world is not just disturbing – it’s also not profitable. Recent blowups like Pershing Square ( OTCPK:PSHZF ) highlight the importance of protecting investor capital. Unfortunately, many managers have the misguided urge to prove their genius, rather than to make money and to protect investor capital. Remember, it’s not about pretending that you’re always right. It’s about making money. A good investor resists the urge to make it all about his own ego. He makes it about safeguarding investor capital. Like a good doctor, the first directive must be to “first, do no harm.” In future posts, we will examine ways to apply conservative risk control to portfolios in order to hedge or to move to cash during a simultaneous collapse in stocks and bonds. Thanks for reading. We feature even more impressive strategy indices in our subscription service. If this post was useful to you, consider giving it a try. Hypothetical performance results have many inherent limitations, some of which are described below. No representation is being made that any account will or is likely to achieve profits or losses similar to those shown; in fact, there are frequently sharp differences between hypothetical performance results and the actual results subsequently achieved by any particular trading program. One of the limitations of hypothetical performance results is that they are generally prepared with the benefit of hindsight. In addition, hypothetical trading does not involve financial risk, and no hypothetical trading record can completely account for the impact of financial risk of actual trading. For example, the ability to withstand losses or to adhere to a particular trading program in spite of trading losses are material points, which can also adversely affect actual trading results. There are numerous other factors related to the markets in general or to the implementation of any specific trading program, which cannot be fully accounted for in the preparation of hypothetical performance results and all which can adversely affect trading results. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Your Strategy Will Sometimes Lag, And That’s OK

By Roger Nusbaum, AdvisorShares ETF Strategist Barron’s featured an ETF Roundtable that focused on smart beta funds . The actual discussion wasn’t all that interesting, but there was an important general point made about investment strategies. Gray: Value investing is driven in part by behavioral biases-otherwise, why wouldn’t everyone just be Warren Buffett and buy cheap stocks and hold them? They don’t because if you hold concentrated, cheap-stock portfolios, there will be multiple years when you’ll get your face ripped off. You need clients that understand how true active strategies work over the long term. Indeed, the cheapest U.S. stocks have trailed more expensive growth stocks for nine years now. Whistler: The challenge with strategic beta, or any factor-based investment, is that they can underperform a traditional cap-weighted index for quite a long period-two, three, even five years. For purposes of this blog post, value investing is merely an example. There are plenty of valid strategies that could replace value in the excerpt. The passage is important, because it accepts as an inevitability that any given strategy will have periods where it lags. Value has lagged for the entire bull market until this year, according to another Barron’s article from this weekend, but there is no sentiment that somehow value is not a valid investment strategy. Value or growth, buy and hold no matter what, indexing or passive and so on and on are all capable of getting the job done. Underperformance for a couple of years, although completely normal, potentially breeds impatience, which can lead to chasing the performance of what just did well in the expectation that it will continue to do well. In simplistic terms, something that just outperformed last year has a good chance of underperforming this year. The person who perpetually chases last year’s winner has a high likelihood of always lagging, which does not have to be ruinous, but does make things harder over the long term in terms of keeping pace with the projection of “the number.” My preference is to maintain exposure to various market segments: small cap/large cap, growth/value, foreign/domestic, high dividend/no or low dividend and so on. And like any approach out there, there are times where my preference outperforms and times where it lags. More important than returns are savings rates and the avoidance of self-destructive investment behaviors. At a high level, everyone knows they need to save money, but doing it is the hard part. People who save 10%, 15% or more are making things easier for their future selves and are acting on the thing they have far more control over – saving money, versus the whims of the capital markets. Chasing previous top performers is just one of countless behavioral things that people do to themselves. My hope in revisiting these building blocks, especially when others in the field say essentially the same thing, is that hopefully, more market participants will come to realize that how they are doing in 2016 simply won’t matter in the long run. As I often mention in this context, “Without looking, how’d you do in the first quarter of 2012?” The only way someone is likely to know is if something catastrophic happened to their portfolio. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. Additional disclosure: To the extent that this content includes references to securities, those references do not constitute an offer or solicitation to buy, sell or hold such securities. AdvisorShares is a sponsor of actively managed exchange-traded funds (ETFs) and holds positions in all of its ETFs. This document should not be considered investment advice, and the information contain within should not be relied upon in assessing whether or not to invest in any products mentioned. Investment in securities carries a high degree of risk, which may result in investors losing all of their invested capital. Please keep in mind that a company’s past financial performance, including the performance of its share price, does not guarantee future results. To learn more about the risks with actively managed ETFs, visit our website AdvisorShares.com .