Alternatives Trade Rationale

Alternatives Trade Rationale:

Over the last six months, given Fundamentum’s view of inflation and its impact upon the economy, interest rates and the financial markets, we began a Due Diligence review of our asset allocations and the alternative investment space. Due to rising inflation and interest rate expectations, the historical “protection” bonds have provided in the past is in question. Therefore, our goal was to diversify our strategies and portfolios away from traditional bonds and low-yielding cash but maintain some of the same “defensive” characteristics these asset classes possess. Our due diligence included a review of fund/manager tenures, historical returns, stress period performances, maximum drawdowns, upside/downside ratios, leverages, financial Greek ratios – (alpha, beta, sharpe, sortino), volatilities, and correlations with other alternative funds and the markets. Finally, we met with the portfolio managers of the leading funds – discussing their Philosophy, Process, Performance and People ( the 4PS ).

As a result of this detailed due diligence, we introduced into our strategies and portfolios selected Alternative 40Act Funds during February. The risk-reward profile of Fundamentum’s alternative sleeve should allow for continued upside participation in the markets with improved downside protection given increased volatility due to elevated inflation expectations and rising interest rates.

As always, we appreciate your confidence in our team.

Fundamentum Investment Committee

John Nichol, CFA® - Investment Committee
Robert Armagno, CFA® - Investment Committee
Trevor Forbes - Investment Committee

Investment advice offered through Fundamentum LLC a registered investment advisor. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. There is no assurance that the investment objective of any investment strategy will be attained. Investing involves risk including loss of principal. Past performance is no guarantee of future performance. All indices are unmanaged and may not be invested into directly.