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Brinker Capital Shutters Trio Of Absolute Return Funds

In 2009, Brinker Capital launched the Brinker Capital Crystal Strategy I, which, according to Brinker, was one of the world’s first absolute return strategies packaged in the Separately Managed Account (“SMA”) format. Five years later, the firm launched three alternative mutual funds, each based on the SMA strategy, but with varying investment objectives. Now, just over two years later, all three funds are shutting down, according to a February 22 filing Brinker made with the Securities and Exchange Commission (“SEC”). The three funds in question, all categorized by Morningstar as multi-alternative funds, are the Crystal Strategy Absolute Income Fund (MUTF: CSTFX ), the Crystal Strategy Absolute Return Fund (MUTF: CSRAX ), and the Crystal Strategy Leveraged Alternative Fund (MUTF: CSLFX ). CSTFX sought to provide current income and downside protection to conventional equity markets with absolute (positive) returns over full market cycles as a secondary objective; CSRAX pursued positive (absolute) returns over full market cycles; and CSLFX sought long-term positive absolute return with reduced correlation to conventional equity markets as a secondary objective. Shortly after the three funds were launched in December 2013 , Brinker Capital Vice Chairman John Coyne said, “We had high expectations for Crystal Strategy when we launched it four years ago, but the reception of financial advisors and their clients to the product surpassed anything we could have imagined.” Mr. Coyne also said the funds were launched in response to investor requests, but for the year ending January 31, 2016, all three funds ranked in the bottom 15% of their category: CSTFX posted one-year returns of -9.09% (bottom 15%), CSRAX returned -10.42% (bottom 10%), and CSLFX returned -16.99% (bottom 1%). Thus, it’s no surprise that Brinker decided that it was in the best interests of shareholders to terminate the funds’ operations. According to the SEC filing, all three funds stopped accepting new investors on February 23, and all shares will be liquidated as of March 18. Jason Seagraves contributed to this article.

Best And Worst Of January: Nontraditional Bond Funds

Nontraditional bond mutual funds and ETFs had a tough month in January, losing 1.13% on average. This extended the category’s one-year losses through January 31 to -2.57%, consisting of -2.76% alpha and a -0.47 beta, relative to the Barclays US Aggregate Bond Total Return USD Index. Mutual funds and ETFs in the category averaged a -0.66 Sharpe ratio for the year ending January 31, with volatility of 3.53%. The nontraditional bond fund category is a mixed bag of long/short credit funds, non-traditional income funds and unconstrained bond funds. In total, there are 150 funds (only 63 have a track record of 3 years or more) in the category and $129.3 billion of assets. Below is a look at the top and bottom performers for January. Top Performers in January The three best-performing nontraditional bond funds in January were: Navigator Tactical Fixed Income Fund A (MUTF: NTBAX ) BTS Tactical Fixed Income Fund A (MUTF: BTFAX ) Counterpoint Tactical Income Fund A (MUTF: CPATX ) NTBAX was the top-performing nontraditional bond fund in January, posting gains of 2.38%. This was enough to push the fund’s one-year returns through January 31 into the black, at +0.34%. These returns consisted of 0.49% alpha and a 0.76 beta, yielding a Sharpe ratio of 0.09 with standard deviation (volatility) of 3.90%. BTFAX ranked second for the month, with gains of 2.00%. Its one-year returns, however, remained in the red at -0.16%, with -0.02% alpha and a 0.65 beta. BFTAX’s one-year Sharpe ratio stood at -0.04 through January 31, with annualized volatility of 4.15%. Finally, CPATX was the month’s third-best performing nontraditional bond fund in January, with gains of 1.31%. Its 12-month returns through January 31 stood at +2.10%, with 2.09% of alpha and a low 0.15 beta. CPTAX’s Sharpe ratio of 0.60 was by far the best of any fund reviewed this month, and its 3.41% volatility was the lowest. Bottom Performers in January The three worst-performing nontraditional bond funds in January were: Driehaus Select Credit Fund (MUTF: DRSLX ) Putnam Diversified Income Trust A (MUTF: PDINX ) Altegris Fixed Income Long Short Fund A (MUTF: FXDAX ) FXDAX was January’s worst-performing nontraditional bond fund, with its shares falling 5.17% for the month. Through January 31, FXDAX’s one-year returns stood at -9.82%, consisting of -10.50% alpha and a -1.59 beta. This gave the fund a one-year Sharpe ratio of -1.60, with annualized volatility of 6.33%. PDINX, the month’s second-worst performer at -4.83%, also had bad-looking one-year numbers. Its losses of 5.47% were made up of -5.86% alpha and a -2.05 beta, yielding a -0.76 Sharpe ratio and 7.15% volatility. Although it outperformed FXDAX and PDINX in January, DRSLX looked worst of all over the year ending January 31. In those 12 months, the fund lost 11.18%, with -11.97% alpha and a -1.55 beta. Its one-year Sharpe ratio stood at -1.70, and its annual volatility was 6.85%. Even over three- and five-year terms, DRSLX was down an annualized 4.58% and 1.66%, respectively. Past performance does not necessarily predict future results. Jason Seagraves contributed to this article. Note: The MPT benchmark used for the above calculations was the Barclays US Aggregate Bond Total Return USD Index.

Do You Need To Buy At Market Bottoms To Get Profitable Results?

By Ronald Delegge Legendary speculator Bernard Baruch once quipped: “Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” Baruch was on to something. And since reams have been written and said about tops and bottoms in both individual securities along with broader markets, we can’t help but ask: Does a person need to buy at the absolute bottom to turn a profit? Hit the rewind button to July 15, 2015, when via ETFguide’s Weekly Picks we wrote the following timestamped ETF trade alert to premium members: Mining stocks are in puke territory and trading 15% below their 50 and 200-day moving average. The Market Vectors Gold Miners ETF (NYSEARCA: GDX ) is oversold and market sentiment is presently overly bearish. We’re buying GDX at current prices near $16.50. Buying depressed out-of-favor assets takes guts, but with enough patience and time, the results can be rewarding. Since our GDX trade alert on Jul. 15, GDX has been dead money and it wasn’t until Jan. 19, 2016 when GDX hit a rock bottom closing price at $12.47. The rest of the global gold mining sector too, went straight into the toilet. And now comes the fun part. Click to enlarge Since GDX’s closing bottom on Jan. 19, the fund has soared +46.05% compared to just a +2.87% gain for the S&P 500. But wait, there’s more. Our GDX position – which we did not buy at the market bottom – is now ahead by a respectable +18.11% (see chart above) and it’s still an open trade. Only a greedy slob would be unhappy with that kind of return in this kind of market. It also explicitly proves that you don’t have to buy at market bottoms to turn a profit. I would argue that having stamina, stomach, and patience (SSP) are far more important than buying stocks or whatever else at the bottom. Why? Because even a trader or investor that buys at the bottom but lacks SSP, will inevitably self-destruct. And besides that, nobody but “liars” consistently buys at market bottoms – nobody . Another real life example – and one of the most extreme cases I’ve ever seen – that buying at market bottoms isn’t a prerequisite to achieving great profits is a Portfolio Report Card I did on my Index Investing Show podcast for a 72-year old man with a $26.9 million portfolio. What did he own? This particular guy invested in biotech stocks right before the 1987 stock market crash. Bad timing. He also bought Apple (NASDAQ: AAPL ) a few years later in 1991 which again was really bad timing. It was such bad timing that ten years later, he was down 25% on his original investment in Apple! Instead of bailing, his SSP (stamina, stomach, and patience) kept him in the game and legendary results followed. Even though he missed several market bottoms in Apple, he was still able to turn an $84,000 investment into over $8 million. In summary, if you want profitable investment results, stop focusing on tops and bottoms and start cultivating SSP. Disclosure: No positions Link to the original post on ETFguide.com