Historically, global macro strategies were mainly offered by private hedge funds with limited transparency, relatively high minimum investment amounts of one million dollars (US$1,000,000) and lock-up periods of over three years. Our minimum investment amount is one hundred thousand dollars (US$100,000), our investing strategies are fully transparent to clients, as custody of client assets remain with Charles Schwab & Co., Inc. or Scottrade, Inc. - and we have no lock-up periods.
We currently offer two global macro strategies to individual and institutional accounts, one unleveraged and the other leveraged by a factor of no more than two times (2x). Our unleveraged strategy is called our Global Alpha strategy, and our leveraged strategy is called our Global Alpha Ultra strategy.
1. Global Alpha
This unleveraged strategy is for clients who desire a global asset allocation strategy across a diverse spectrum of assets with capital appreciation goals and lower risk. We mitigate investment risk by selecting investments that are quantifiably less correlated with each other, and with a client's overall portfolio. The investments are allocated across a diverse spectrum of assets, including equities, fixed income, commodities, currencies and real estate. These investments are also allocated between strategic and tactical allocations (approximately sixty‐seven percent to thirty‐three percent), meaning about two‐thirds of our exposure is longer term, over one year, and one‐thirds is shorter term, less than one year. The beta, or risk level, of the portfolio is managed actively by integrating the tactical with the strategic, making it possible to dynamically adjust the net market exposure of the portfolio while concurrently enhancing performance. By utilizing this portfolio construction method, our strategies have outperformed the S&P 500 index and other global macro indices since inception. Please view the "Performance" Tab for Global Alpha.
2. Global Alpha Ultra
This is a leveraged strategy, but no more than 2x leverage, designed for the client who seeks higher returns with a bit more risk. As an example, since inception in 2005, our Global Alpha strategy returned over 59%, whereas our Global Alpha Ultra strategy returned over 80% - please see the "Performance" and "Information" Tabs for GIPS verified and examined performance numbers. For this strategy we utilize the same, scientific and structured approach as our unleveraged strategy, however our security selection focuses more on those securities with more leverage, albeit still within our guidelines. Please view the Performance Tab for Global Alpha Ultra.
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Our strategies do not involve frequent trading of securities, as we are not a high frequency trading firm, nor do we adhere to the doctrine that frequent trading results in higher performance. On the contrary, our trades are done with relative infrequency, and only when our models provide an indication to do so. Once this occurs, our Investment Committee confers, and endorses the trade for execution.
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All our clients have a degree of control not experienced with private hedge funds or mutual funds, as each client is able to monitor his or her account in real time, and the client does not need to write a check to a limited partnership whose holdings are not visible to the investor. The minimum investment is US$100,000, although we can make exceptions accordingly. Here is a summary of the differences between investing with traditional hedge funds versus our firm.
Traditional Hedge Funds - Requirement to transfer your funds to a limited partnership. Minimum Investment Amount: US$1,000,000. Limited Transparency. Three-Year or More Lock-Up Period. Fee Structure - 2% and 20% of Profits.
Our Firm's Strategies - Deployed through your own investment accounts at Charles Schwab & Co., or Scottrade, Inc.. Minimum Investment Amount: US$100,000. Full Transparency of Entire Investment Portfolio in Real Time Online. Statements Provided Monthly. No Lock-Up Period. Fee Structure - up to 2% or 20% of Profits.
We view our strategies as complementary to the more traditional and relatively aggressive styles of most financial advisers, who rely mainly on the equity markets and use the S&P 500 as their benchmark. Since our strategies offer a quantitative approach to hedging market risk across asset classes, we recommend that a given portion of any client’s overall portfolio be invested with our strategies. If the client is an individual, this portion is generally determined by a discussion with the client regarding our hedge strategies with respect to the client’s risk tolerances and an analysis of the client’s overall portfolio. If the client is an institution, we may not have complete visibility into the client’s overall portfolio, and thereby would deploy our strategies accordingly.
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