The Fund seeks to generate total returns over a complete market cycle through capital appreciation and income.
The CMG Tactical Bond Fund (the “Fund”) invests in high yield bond markets using a proprietary quantitative investment model that looks at price, volume, yield spreads and default rates to identify trends in U.S. high yield bonds. The investment model seeks to identify opportunities where the short-term and intermediate-term direction of the U.S. high yield bond market can be predicted with high probability. The Fund’s investment advisor (the “Advisor”) adjusts the Fund’s portfolio to obtain maximum total return (income and price appreciation) in up trending high yield bond markets and focuses on capital preservation in down trending price environments, in seeking to achieve the Fund’s objective of generating total returns over a complete market cycle (full periods of rising and falling interest rates from a bull market to bear market and back again). The Advisor utilizes its proprietary risk management “Asset Allocation Program” in managing the Fund. In down trending price environments, the Fund can also invest in put and call options as a means to protect (hedge) the portfolio’s high yield bond exposure and/or move its high yield bond exposure temporarily to cash or short-term cash equivalents in an attempt to mitigate market declines as well as lower portfolio volatility.
The Fund invests in fixed income securities that are sometimes referred to as “high yield” or “junk” bonds. The Fund defines high yield bonds as those rated lower than Baa3 by Moody’s or lower than BBB- by S&P, or determined to be of similar quality by the Fund’s Advisor. Such securities are considered speculative investments that carry a greater risk of default. Because high yield bonds have a historically high correlation to equity markets, in particular to small cap stocks, the Fund may be indirectly exposed to the same risks as the stock market in general.
There is no guarantee that any investment will achieve its objectives, generate positive returns, or avoid losses.
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:
Call Option: An agreement that gives an investor the right, but not the obligation, to buy a stock, bond, commodity, or other instruments at a specified price within a specific time period.
Downside Risk: An estimation of a security’s potential to suffer a decline in price if the market conditions turn negative.
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.
Long: Buying a security such as a stock, commodity or currency, with the expectation that the asset will rise in value.
Put Option: An option contract giving the owner the right, but not the obligation, to sell a specified amount of an underlying security at a specified price within a specified time. This is the opposite of a call option, which gives the holder the right to buy shares.
Spread Duration: Represents the sensitivity of a portfolio to spread changes in the corporate bond market.
Volatility: A statistical measure of the dispersion of returns for a given security or market index. Volatility can either be measured by using the standard deviation or variance between returns from that same security or market index. Commonly, the higher the volatility, the riskier the security.