WALNUT CREEK, Calif.—Litman Gregory Fund Advisors, LLC, an affiliate of wealth management firm Litman Gregory Asset Management, today announced the addition of DCI as a sub-advisor to the Litman Gregory Masters Alternative Strategies Fund, effective July 10, 2017. DCI will be managing a Long-Short Credit Strategy for the fund.
DCI is a San Francisco-based, corporate-credit-focused investment firm that manages systematic quantitative-driven portfolios of long-short, long-only and net-short credit strategies. The firm was founded in 2004 by Stephen Kealhofer, David Solo, Mac McQuown, Tim Kasta, and Richard Donick.
The Litman Gregory Masters Alternative Strategies Fund is a core alternatives fund that provides access to the distinct investment strategies of a group of highly skilled managers. DCI joins five existing sub-advisor teams on the fund: DoubleLine Capital, First Pacific Advisors, Loomis Sayles, Passport Capital, and Water Island Capital.
“We have been familiar with DCI for several years and focused our due diligence on them for a potential sub-advisory relationship over the last 18 months,” said Jeremy DeGroot, Litman Gregory chief investment officer and portfolio manager. “There are a number of factors that contribute to our enthusiasm for adding DCI as a sub-advisor to the fund. Among those are the team’s strong pedigree, history of innovation in systematic investing, and track record of investment results. Their investment process analyzes and integrates a variety of fundamental inputs from different markets (credit, equity, options) in a way we believe is rare among credit managers.”
DCI’s investment philosophy is based on two core characteristics of the credit markets: first, that credit markets contain exploitable information gaps; and second, that credit markets are poorly diversified and inefficient. Over the course of 20-plus years, DCI’s principals have built and refined a systematic investment approach that takes advantage of these credit market inefficiencies.
“Based on our research, we are confident DCI’s strategy has the potential to generate attractive risk-adjusted returns across a variety of market environments, with low volatility, minimal correlation to equity and high-yield bond markets, and low risk of significant drawdowns,” says DeGroot. “Additionally, because of its low correlation to the existing strategies on the fund, we believe DCI is an attractive complement and should contribute to achieving the fund’s overall risk, return, and diversification objectives.”
For more information and analysis on this manager addition, see our due diligence report.