Litman Gregory Masters Alternative Strategies FundMASFX, MASNX
Overview
The Litman Gregory Masters Alternative Strategies Fund is a multi-manager, multi-strategy fund that combines alternative and absolute-return-oriented strategies chosen based on Litman Gregory’s conviction that each individual manager’s strategy is compelling and that collectively the strategies are well diversified. The fund seeks to achieve long-term returns with lower risk and lower volatility than the stock market, and with relatively low correlation to stock and bond market indexes at a reasonable cost.
Why was this fund created?
For several years Litman Gregory researched the public mutual fund universe for compelling alternative strategies available at a reasonable cost, with the daily liquidity, transparency, and ease of access of a publically available mutual fund. After being discouraged by our assessment of the quality and cost of most of the funds we found, we decided to create our own fund. We wanted strategies:
- That are transparent and understandable
- With inherently lower risk because of the nature of their investment universe and/or because of the way in which the managers address risk
- Run by managers where our due diligence has given us a clear understanding of how they can add value and confidence in their ability to achieve their risk/return objectives
- That are not driven by the same risk factors, creating diversification that Litman Gregory believes has the potential to benefit the fund in most bear markets
- Where managers can take advantage of the additional flexibility that comes from a multi-manager structure, and in some cases invest in ways that only accredited investors would usually have access to
- Where the strategies retain the flexibility to take advantage of compelling opportunities that arise when valuations become severely depressed
What makes this fund different?
- It offers a mix of strategies and managers that are not available in a single publicly available mutual fund.
- The managers are highly experienced and have been chosen for their specialized and demonstrated expertise, and for their complementary, low-correlation investment approaches.
- Risk control is intended to be a function of several factors including: the inherent risk level of the strategies; the risk sensitive nature of the managers; the skill of the managers; and the overall strategy diversification.
- Litman Gregory may tactically alter each manager’s allocations to take advantage of particularly compelling opportunities for a specific strategy or to further manage risk (though normally the allocations are expected to be equally weighted).
What are the potential advantages created by the fund’s structure?
We have designed this fund to provide managers with a high degree of flexibility. For example, our managers can use leverage, portfolio concentration, and take advantage of less-liquid opportunities more fully in this multi-strategy vehicle than they would in a fund consisting only of a single strategy. We believe that this will allow managers to pursue higher long-term returns while the fund maintains diversification and risk management.
What is the fund's role in a portfolio?
We consider the fund a substitute for a portion of a portfolio’s exposure to traditional stocks and bonds. If the fund meets our goals, Litman Gregory believes that owning it as a core holding has the potential to offer returns that are as good as or better than the stock/bond mix from which it was funded, with less volatility and downside risk and added diversification. There are no guarantees that the fund will meet our goals.
We believe the fund should be considered by risk-averse investors who seek a source of diversification for traditional stock and bond portfolios to reduce volatility and potentially enhance returns relative to various measures of risk.
Loomis Sayles |
Water Island Capital |
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Strategy: Absolute-Return Fixed-Income The strategy’s absolute-return objective means that it is not managed relative to an index and that it attempts to achieve positive total returns over a full market cycle with relatively low volatility. The Loomis team pursues this objective by utilizing a flexible investment approach that allocates investments across a global range of investment opportunities related to credit, currencies, and interest rates, while employing risk management strategies to help mitigate downside risk. The team’s investment process employs both top-down (macro themes) and bottom-up (security selection) components and uses the resources of the entire Loomis Sayles infrastructure. Manager bio. |
 John Orrico
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Strategy: Arbitrage Strategy The Water Island team seeks to generate long-term returns with low correlation to the equity and bond markets. This objective is pursued by investing in equity and debt securities of companies that are impacted by corporate events such as mergers, acquisitions, restructurings, refinancings, recapitalizations, reorganizations, or other special situations. More specifically, the team follows any one of three arbitrage strategies: merger arbitrage, convertible arbitrage or capital structure arbitrage and may invest in both U.S. and non-U.S. securities. The Water Island team intends to concentrate the portfolio in only their highest- conviction risk-adjusted ideas across these strategies, and will, to a limited extent, employ leverage. Manager bio.
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DoubleLine Capital |
First Pacific Advisors |
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Strategy: Opportunistic Income Gundlach and the DoubleLine team operate under the cardinal mandate of delivering superior risk-adjusted fixed-income returns. They seek to deliver positive absolute returns in excess of an appropriate aggregate fixed-income index with portfolio volatility that is similar to U.S. long-term treasury securities. Investment ideas employed by Gundlach and his team must offer an asymmetric, positively skewed risk-reward profile. As a result, a great deal of their analysis seeks to identify fixed-income securities that they believe offer greater potential payoff than potential loss under multiple scenarios. Ultimately, a combination of risk management, asset allocation, and security selection forms Gundlach’s investment process. Manager bio. |
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Strategy: Contrarian Opportunity This strategy leads to investments that offer absolute rather than relative value with an objective of strong risk-adjusted returns. As absolute-return investors, the FPA team seeks genuine bargains rather than relatively attractive securities. The goal is to provide equity-like returns over longer periods (i.e., five to seven years) while seeking to preserve capital. Attention is directed toward those companies offering the best combination of such quality criteria as strong market share, good management, and high normalized return on capital. A company purchased might not look inexpensive, considering current earnings and return on capital; however, its valuation may reflect such conditions as a weak economy, an increase in raw material costs, a management misstep, or any number of other temporary conditions. The FPA team believes that price drops caused by such developments can, and often do, provide buying opportunities. The FPA team employs the broad mandate of the FPA contrarian strategy to invest across the capital structure, asset classes, market capitalization, industries and geographies using a wide variety of instruments. Manager bio. |
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Monthly Performance as of 4/30/2012
| Average Annual Total Return | |||
|---|---|---|---|
| Monthly Performance as of 4/30/2012 | One Month | Year to Date | Since Inception 09/30/11 |
Litman Gregory Masters Alternative Strategies Fund (Institutional Class 9/30/11) |
0.28% | 4.36% | 7.92% |
Litman Gregory Masters Alternative Strategies Fund (Investor Class 9/30/11) |
0.28% | 4.32% | 7.85% |
Barclays Aggregate Bond Index |
1.11% | 1.42% | 2.55% |
S&P 500 Index |
-0.63% | 11.88% | 25.10% |
40/60 Blend of S&P 500 & Barclays Agg Bond Index |
0.41% | 5.54% | 11.24% |
3-Month LIBOR |
0.04% | 0.20% | 0.27% |
Quarterly Performance as of 3/31/2012
| Average Annual Total Return | |||
|---|---|---|---|
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QuarterlyPerformance as of 3/31/2012 |
One Month | Year to Date | Since Inception 09/30/11 |
Litman Gregory Masters Alternative Strategies Fund (Institutional Class 9/30/11) |
0.75% | 4.07% | 7.62% |
Litman Gregory Masters Alternative Strategies Fund (Investor Class 9/30/11) |
0.80% | 4.02% | 7.55% |
Barclays Aggregate Bond Index |
-0.55% | 0.31% | 1.43% |
S&P 500 Index |
3.29% | 12.59% | 25.89% |
40/60 Blend of S&P 500 & Barclays Agg Bond Index |
0.99% | 5.10% | 10.78% |
3-Month LIBOR |
0.04% | 0.16% | 0.23% |
Expense Ratios
| Gross Expense Ratio* | Net Expense Ratio** | |
|---|---|---|
| Litman Gregory Masters Alternative Strategies Fund (Institutional Class 9/30/11) | 1.98% | 1.49% |
| Litman Gregory Masters Alternative Strategies Fund (Investor Class 9/30/11) | 2.23% | 1.74% |
* The gross and net expense ratios can be found on page 1 of the most recent Summary Prospectus (4/30/2012)
** Through 4/30/2013, Litman Gregory has contractually agreed to waive a portion of its advisory fees and/or reimburse a portion of the fund's operating expenses to ensure that the total annual fund operating expenses after fee waiver and/or expense reimbursement for the Institutional Class and the Investor Class will not exceed 1.49% and 1.74%, respectively.
Performance data quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that that an investor's shares, when redeemed, may be worth more or less than their original cost. The funds impose a 2% redemption fee on shares held less than 180 days. Performance data does not reflect the redemption fee. If reflected, total returns would be reduced. Current performance of the fund may be lower or higher than the performance quoted. Short term performance, in particular, is not a good indication of the fund's future performance, and an investment should not be made based solely on returns.
Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced.
Indexes are unmanaged, do not incur fees and cannot be invested in directly. Click here for index definitions.
Calendar Year Performance
| 2011 | |
|---|---|
| Litman Gregory Masters Alternative Strategies Fund (Institutional Class 9/30/11) |
3.41%a
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| Barclays Aggregate Bond Index |
1.12%a
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| S&P 500 Index |
11.81%a
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| 40/60 Blend of S&P 500 & Barclays Agg Bond Index |
5.40%a
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| 3-Month LIBOR |
0.07%a
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a Performance from 9/30/2011- 12/31/2011
The Litman Gregory Alternative Strategies Fund was launched on September 30, 2011. Fund data will be posted in mid April 2012.