LJM Preservation & Growth Fund Passes Three-Year Anniversary; Garners 5-Star Morningstar Rating
"For 18 years, our investment management team has been managing options strategies that harness the volatility of the
LJM creates and manages portfolios of short and long options on S&P 500 Index futures. The fund seeks to profit, primarily, from the "volatility premium"—the difference between implied volatility (investors' forecast of market volatility reflected in options pricing) and actual market volatility. The LJM strategy aims to capture this volatility premium by writing (selling) options. The fund's investment managers will also buy options to help mitigate the impact of sudden price moves and potentially add incremental return.
"Individual investors and institutions buy options to hedge their investments from market swings, which creates a volatility premium. Our short volatility strategy seeks to profit from this premium and has very low correlation with traditional assets. As we enter a period where stock and bond returns are projected to be tepid at best, we believe there will be increasing demand for volatility strategies, which don't rely on the markets rising in order to post positive returns," Caine added.
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Morningstar is an independent provider of financial information. Morningstar performance rankings are based on total return without sales charge relative to all share classes of mutual funds with similar objectives and determined by Morningstar. The top 10% of the funds in a rating universe receive five stars, the next 22.5% receive four stars, the next 35% receive three stars, the next 22.5% receive two stars and the bottom 10% receive one star. Past performance or ranking is not indicative of future results.
Mutual Funds involve risk including possible loss of principal. The Fund will invest a percentage of its assets in derivatives, such as futures and options contracts. The use of such derivatives and the resulting high portfolio turnover, may expose the Fund to additional risks that it would not be subject to, if it invested directly in the securities and commodities underlying those derivatives. The Fund may experience losses that exceed those experienced by funds that do not use futures contracts, options and hedging strategies. Changes in interest rates and the liquidity of certain investments could affect the Fund's overall performance. The Fund is non-diversified and as a result, changes in the value of a single security may have significant effect on the Fund's value. Other risks include
Typically, a rise in interest rates causes a decline in the value of fixed income securities or derivatives owned by the Fund. Furthermore, the use of leveraging can magnify the potential for gain or loss and amplify the effects of market volatility on the Fund's share price. The Fund is subject to regulatory change and tax risks. Changes to current regulation or taxation rules could increase costs associated with an investment in the Fund.
Investments in mutual funds involve risks. There is no assurance that the Fund will achieve its investment objective. Investment return and principal value will fluctuate with changing market conditions so that when redeemed, shares may be worth more or less than their original cost. Investors should carefully consider the investment objectives, risks, charges, and expenses of the
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