Litman Gregory Masters Alternative Strategies Fund

Litman Gregory Masters Alternative Strategies FundMASFX, MASNX

4 StarsOverall Morningstar Rating™
MASFX: Five-star Overall Morningstar Rating™, among 253 Morningstar Multialternative funds based on risk-adjusted return for the period ending 9/30/17.i

We couldn't find a core alternatives strategy that we liked, so we created one.

Risk-Management Goals
Lower risk and lower volatility than the stock market

  • Inherently lower risk because of the nature of each manager's investment universe and/or because of the way in which each manager addresses risk (low risk of negative returns over any given one-year time period)
  • Relatively low correlation to stock and bond market indexes

Volatility in the range of 4% to 8%

  • 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

Return Goals
Strong absolute, relative and risk-adjusted returns over full market cycles

  • 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. For example, our managers can use leverage, portfolio concentration, and take advantage of less-liquid opportunities. Flexibility to take advantage of compelling opportunities that arise when valuations become severely depressed
  • Litman Gregory may tactically alter each sub-advisor's allocation to take advantage of particularly compelling opportunities for a specific strategy or to further manage risk

Other key features:

  • Highly competitive cost
  • Transparent and understandable
  • Highly experienced managers chosen for their specialized and demonstrated expertise, and for their complementary, low-correlation investment approaches. Each manager runs individualized sleeves for Litman Gregory (this is not a fund of funds).
  • A mix of strategies and managers not available in a single publicly available mutual fund

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.

DCI

 
Stephen Kealhofer
Stephen Kealhofer
Tim Kasta
Tim Kasta
Richard Donick
Richard Donick

Paul Harrison
Paul Harrison
Bin Zeng
Bin Zeng
Adam Dwinells
Adam Dwinells

Target Manager Allocation: 16%
Strategy: Long-Short Credit

Read the full manager bio

DCI’s strategies employ a systematic portfolio construction process underpinned by a proprietary, fundamental model of credit risk and valuation. DCI’s investment process is designed to exploit information gaps between credit and equity markets and other market inefficiencies to identify and capture mispricing at the individual asset level. The DCI Long-Short Credit Strategy is seeks to generate returns from idiosyncratic credit selection, as the strategy systematically curtails rate duration and credit beta exposure. Correlations to systematic market risks including high yield and equity market returns are expected to be minimal, and strategy returns are not expected to be correlated to the returns of other active strategies. The DCI Long-Short Credit Strategy is designed to perform in both low and high volatility environments although returns are expected to be higher in higher volatility environments.
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DoubleLine

 
Jeffrey Gundlach
Jeffrey
Gundlach

Target Manager Allocation: 23%
Strategy: Opportunistic Income

Read the full manager bio

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.
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FPA

 
Steven Romick
Steven
Romick
Brian Selmo
Brian Selmo
Mark Landecker
Mark Landecker

Target Manager Allocation: 17%
Strategy: Contrarian Opportunity

Read the full manager bio

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.
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Loomis Sayles

 
Matt Eagan
Matt Eagan
Kevin Kearns
Kevin Kearns
Todd Vandam
Todd Vandam

Target Manager Allocation: 17%
Strategy: Absolute-Return Fixed-Income

Read the full manager bio

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.
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Passport Capital

 
Matt Eagan
John Burbank III

Target Manager Allocation: 10%
Strategy: Long-Short Equity

Read the full manager bio

Passport Capital seeks to achieve superior risk-adjusted returns through a combination of macroeconomic analysis, fundamental research, and quantitative tools. It employs top-down, macroeconomic analysis to identify durable, secular changes not reflected in asset prices. It conducts rigorous fundamental research in an attempt to identify individual securities that most effectively express the firm's investment views. Finally, the firm employs quantitative tools to construct portfolios aimed at delivering superior returns within specific risk and liquidity targets.
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Water Island Capital

 
John Orrico
John
Orrico
Todd Munn
Todd
Munn
Roger Foltynowicz
Roger
Foltynowicz
Gregg Loprete
Gregg
Loprete

Target Manager Allocation: 17%
Strategy: Arbitrage Strategy

Read the full manager bio

John Orrico, Todd Munn, Roger Foltynowicz, and Gregg Loprete are the portfolio managers responsible for the arbitrage strategy, which is the segment of the Alternative Strategies Fund’s assets managed by Water Island Capital, LLC.

Investment 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.
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Monthly Performance as of 10/31/2017

        Average Annual Total Return
Monthly Performance as of 10/31/2017 One Month Year to Date 12 Month Total Return 3 Year Average 5 Year Average Since Inception 09/30/11
Litman Gregory Masters Alternative Strategies Fund (Institutional Class 9/30/11)
0.43% 4.25% 5.76% 3.46% 4.46% 5.41%
Litman Gregory Masters Alternative Strategies Fund (Investor Class 9/30/11)
0.34% 3.96% 5.48% 3.25% 4.23% 5.17%
Barclays Aggregate Bond Index
0.06% 3.20% 0.90% 2.41% 2.04% 2.56%
3-Month LIBOR
0.12% 0.98% 1.13% 0.66% 0.50% 0.50%
Morningstar Multialternative Category Average
0.85% 4.67% 5.43% 1.04% 1.64% 2.04%
HFRX Global Hedge Fund Index
0.69% 5.14% 6.97% 1.13% 2.23% 2.11%
Russell 1000 Index
2.29% 16.78% 23.67% 10.58% 15.18% 16.95%

 


Quarterly  Performance as of 09/30/2017

        Average Annual Total Return

Quarterly Performance as of 09/30/2017
One Month Year to Date 12 Month Total Return 3 Year Average 5 Year Average Since Inception 09/30/11
Litman Gregory Masters Alternative Strategies Fund (Institutional Class 9/30/11)
0.13% 3.81% 5.03% 3.37% 4.28% 5.41%
Litman Gregory Masters Alternative Strategies Fund (Investor Class 9/30/11)
0.24% 3.61% 4.84% 3.16% 4.04% 5.18%
Barclays Aggregate Bond Index
-0.48% 3.14% 0.07% 2.72% 2.07% 2.58%
3-Month LIBOR
0.11% 0.86% 1.08% 0.63% 0.49% 0.49%
Morningstar Multialternative Category Average
0.43% 3.79% 3.66% 0.81% 1.36% 1.93%
HFRX Global Hedge Fund Index
0.60% 4.42% 5.63% 0.45% 1.99% 2.02%
Russell 1000 Index
2.13% 14.17% 18.54% 10.63% 14.27% 16.76%

Expense Ratios

  MASFX MASNX
Inception Date 9/30/2011 9/30/2011
As Of Date 4/30/2017 4/30/2017
Net Expense Ratio (%)
Excluding Dividend Expense on Short Sales and Interest & Borrowing Costs on Leverage Line of Credit 1
1.47 1.72
Total Operating Expenses (%) 2 1.75 2.00
Gross Expense Ratio (%) 1.83 2.08

 

1 - Does not include dividend expense on short sales of 0.19% and Interest, Commitment Fees and other Borrowing Costs of 0.09%.
2 - The Advisor is contractually obligated to waive management fees and/or reimburse ordinary operating expenses through April 30, 2018. The total operating expense includes dividend and interest expense on short sales and interest and borrowing costs incurred for investment purposes, which are not included in the expense ratio.

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. Current performance of the fund may be lower or higher than the performance quoted. To obtain the performance of the funds as of the most recently completed calendar month, please visit www.mastersfunds.com.

Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced.

Calendar Year Performance

  2011 2012 2013 2014 2015 2016
Litman Gregory Masters Alternative Strategies Fund (Institutional Class 9/30/11)
3.41%a
9.41%
6.32%
3.58%
-0.77%
6.87%
Barclays Aggregate Bond Index
1.12%a
4.23%
-2.02%
5.96%
0.57%
2.66%
3-Month LIBOR
0.07%a
0.52%
0.27%
0.24%
0.28%
0.68%
Morningstar Multialternative Category Average 1.38%a 3.49% 3.38% 1.64% -2.72% 0.76%
HFRX Global Hedge Fund Index
-0.49%a
3.51%
6.73%
-0.57%
-3.64%
2.51%
Russell 1000 Index
11.84%a
16.42%
33.11%
13.24%
0.92%
12.05%

a Performance from 9/30/2011- 12/31/2011

Fund Facts

Inception Date: 9/30/2011
Cusip Number: 53700T 801
Ticker Symbol: MASFX
Minimum Investment: $100,000 ($5,000 retirement accounts)
Sales Loads: None
12B-1 Fees: None
Phone: (800) 960-0188

While the fund is no-load, management and other expenses still apply.

 

Expense Ratios

  MASFX
Inception Date 9/30/2011
As Of Date 4/30/2017
Net Expense Ratio (%)
Excluding Dividend Expense on Short Sales and Interest & Borrowing Costs on Leverage Line of Credit 1
1.47
Total Operating Expenses (%) 2 1.75
Gross Expense Ratio (%) 1.83

 

1 - Does not include dividend expense on short sales of 0.19% and interest expense of 0.09%
2 - The Advisor is contractually obligated to waive management fees and/or reimburse ordinary operating expenses through April 30, 2018. The total operating expense includes dividend and interest expense on short sales and interest and borrowing costs incurred for investment purposes, which are not included in the expense ratio.

DoubleLine Opportunistic Income Strategy Sector Exposures (as of 9.30.17)

FPA Opportunistic Value Strategy Asset Class Exposures (as of 9.30.17)

Loomis Sayles Absolute-Return Fixed-Income Strategy Exposures (as of 9.30.17)

Passport Capital Long-Short Equity Strategy Exposures (as of 9.30.17)

Water Island Arbitrage Strategy Exposures (as of 9.30.17)

Note:Total includes leverage line of credit.

 

 

Holdings and sector allocations are subject to change at any time and are not recommendations to buy or sell any security.

Totals may not add up to 100% due to rounding.

Litman Gregory Masters Alternative Strategies Fund Commentary, 3rd Quarter 2017

Besides the addition of new sub-advisor DCI, the quarter was relatively quiet for the fund. Most of our managers remain defensively positioned, yet all produced positive returns. ›› Read More

Video: Steve Savage on the Alternative Strategies Fund

RIA Channel’s Julie Cooling hosts CEO Steve Savage for a discussion on the Alternative Strategies Fund ›› Watch

Sub-Advisor Q&A

We talk with Alternative Strategies Fund sub-advisor Matt Eagan about how he and his team at Loomis Sayles harvest risk premia across fixed-income cycles and elements of risk management embedded in the investment process he uses within his sleeve of the fund. ›› Read More

 


 

Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Current performance of the funds may be lower or higher than the performance quoted. To obtain the performance of the funds as of the most recently completed calendar month, please click www.mastersfunds.com. Indexes are unmanaged, do not incur fees, and cannot be invested in directly.