The Fund seeks to generate long-term total returns with less volatility than global equity markets.
The CMG Global Equity Fund seeks to generate long-term total returns with less volatility than global equity markets. CMG Capital Management Group, Inc., through a research partnership with Absolute Return Partners, LLP, a London based investment management company, seeks to construct a portfolio of global equity securities by identifying companies with strong balance sheets and solid earnings over the long term. AlphaSimplex Group, LLC, founded by Dr. Andrew Lo, as sub advisor to the Fund, attempts to identify periods of high risk in global equity markets and hedge equity exposure through active volatility management.
Global Equity Investment Process:
The equity investment process is driven by an eight stage empirical method of identifying and rating the relative economic quality of 35,000 companies across 150 countries. The equity selection process seeks to identify global companies that the advisor believes have demonstrated a repeatedly proven business model that have delivered high relative earnings and financial strength over the long term. A series of key financial ratios are calculated to rate the combined earnings and financial strength of each company. A stability overlay is subsequently applied to track and determine the consistency of each company’s financial performance over time: a company’s “staying power”. The stocks with the highest ratings are then selected to form the Global portfolio.
The eight stage process is comprised of the following steps:
- Universe Definition: Identify companies with at least 3 years of audited financials;
- Rating: Rank companies by profit per-share and balance leverage;
- Stability Overlay: Re-rank favorable companies by variability of profits and leverage;
- Final Assessment: Screen out equities with insufficient liquidity relative to the portfolio’s size;
- Implementation: Invest in “top” equities, typically 50-100 positions, as determined by the screening process, on an equally-weighted basis;
- Company Monitor: Daily review and replacement of any substantially deteriorating companies with next best ranked equities;
- Portfolio Management: Monthly re-identification and purchase of “top” equities, as determined by the Adviser’s screening process; and
- Rebalance: Annual rebalancing to equally-weight the “top” equities, as determined by the Adviser’s screening process.
There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.
Active Volatility Management:
CMG has designated AlphaSimplex Group, LLC as the sub-advisor to the Fund with responsibility for active volatility management of the portfolio. AlphaSimplex, founded in 1999 by MIT professor Dr. Andrew Lo, specializes in absolute return and risk management strategies. Active volatility management is a dynamic overly strategy that attempts to enhance a portfolio’s risk profile by potentially identifying periods of high risk in equity markets and hedging equity exposure by investing in liquid futures contracts. During periods when downside risk is deemed by the sub- advisor to exceed upside potential, the overlay strategy will attempt to reduce exposure in an effort to bring downside risk to its long-term level.
About the Fund Sub-Advisor:
Founded in 1999, AlphaSimplex Group offers investment solutions designed to bring more flexibility and improved risk management to mutual funds investing. Dr. Andrew Lo and Dr. Alexander Healy serve as portfolio managers with responsibility for the Fund’s active volatility management process.
¹ Load waivable. Please review prospectus for qualification. Other fees and expenses do apply to investments in the Fund.
² The adviser may waive the Class I shares minimum account requirements if the adviser believes that the aggregated accounts of a financial intermediary will meet the minimum initial investment requirement. Lower minimum initial and additional investments may also be applicable in certain other circumstances, including purchases by certain tax deferred retirement programs.
Definition of terms:
Absolute Return: The return that an asset achieves over a certain period of time. This measure looks at the appreciation or depreciation (expressed as a percentage) that an asset – usually a stock or a mutual fund – achieves over a given period of time.
Downside Risk: An estimation of a security’s potential to suffer a decline in price if the market conditions turn negative.
Long: Buying a security such as a stock, commodity or currency, with the expectation that the asset will rise in value.
Hedge: an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.
Futures Contracts: A contractual agreement, generally made on the trading floor of a futures exchange, to buy or sell a particular commodity or financial instrument at a pre-determined price in the future.