Litman Gregory Masters High Income Alternatives Fund

Litman Gregory Masters High Income Alternatives FundMAHIX, MAHNX - Open for Investment on 9/28/2018

Fund Objective

The Litman Gregory Masters High Income Alternatives Fund (the "High Income Alternatives Fund") seeks to generate a high level of current income from diverse sources, consistent with the goal of capital preservation over time. Capital appreciation is a secondary objective.

Key Fund Attributes/Characteristics

The fund is sub-advised by skilled, experienced managers executing differentiated income-oriented strategies focused on non-traditional and/or less efficient market areas. The fund seeks to generate high current income relative to the Bloomberg Barclays Aggregate U.S. Bond Index, with volatility that is typically less than high-yield bond indexes.

We have designed the fund to provide each manager with a high degree of flexibility to implement their strategies. The multi-manager structure allows each sub-advisor to take full advantage of compelling opportunities in their pursuit of high income, while achieving broad diversification at the overall fund level.

  • Access to alternative sources of income that investors may not otherwise own
  • Seeks high level of income without taking unnecessary risk or reaching for yield
  • Leverages Litman Gregory’s expertise investing in income-generating strategies beyond traditional core fixed-income
  • Leverages Litman Gregory’s access to top-tier investment managers

The fund’s role in a portfolio

The fund is best viewed as a complement to traditional fixed income allocations, seeking a goal of returns significantly higher than core fixed income with low correlation and less interest rate sensitivity, but higher volatility.* The fund can serve as part of an investor’s diversified fixed income allocation, or as part of an alternative strategies allocation.

Ares Management

 
Mason
Greg Mason
Ward
Troy Ward

Strategy: Alternative Equity Income
Target Allocation: 15%

Read the full manager bio

The strategy invests in specialty income-generating public securities, primarily business development companies (BDCs), mortgage real estate investment trusts (mREITs), master limited partnerships (MLPs) and related infrastructure corporations, and selectively in credit-based closed end funds (CEFs) trading at discounts to net asset value and other opportunistic income investments. The long-term average sector allocations (exclusive of opportunistic positions) are expected to be approximately 60% to BDCs, and 20% each to mREITs and MLPs, although the portfolio managers have significant latitude to over- or underweight sectors based on their assessment of the risks and opportunities within their investment universe.

 

Brown Brothers Harriman (BBH)

 
Hofer
Andrew P.
Hofer
Hohmann
Neil
Hohmann
Kunz
Paul Kunz

Strategy: Credit Value
Target Allocation: 32.5%

Read the full manager bio

An absolute-return-oriented strategy that can invest across a wide variety of sectors, but will primarily hold asset-backed and corporate securities. The emphasis is expected to be on A/BBB-rated asset-backed securities, and BBB/BB-rated corporate securities, as these ratings segments have historically offered attractive risk-adjusted returns, along with low default rates, and limited drawdowns. Should opportunities arise in lower-quality segments, the strategy has the flexibility to invest in those securities, though the sub-advisor will rarely own CCC-rated or distressed securities. The portfolio is built from the bottom-up, i.e., value opportunities drive portfolio construction. To qualify for the portfolio, credits need to be able to withstand a wide range of economic conditions, be well-managed, have an appropriate capital structures, have adequate transparency, and be attractively valued. The portfolio is relatively concentrated (approximately 80 holdings) in opportunities believed to offer the best risk-adjusted returns. The sub-advisor may invest in U.S. Treasury futures to manage duration, which allows security selection to be managed independent of portfolio duration.

 

Guggenheim Partners

 
Minerd
B. Scott
Minerd
Walsh
Anne Walsh
Brown
Steven
Brown
Bloch
Adam Bloch

Strategy: Multi-Credit
Target Allocation: 32.5%

Read the full manager bio

An unconstrained, income-focused strategy that seeks attractive risk-adjusted returns in all market environments. It is not constrained by duration and has the flexibility to invest across the fixed-income market, including, but not limited to, corporate bonds, loans and loan participations, structured finance investments, U.S. government and agency, mezzanine and preferred securities and convertible securities. The strategy has the flexibility to move up and down in credit-quality, and across issuers’ capital structure. The majority of the portfolio will be in securities and sectors not held in traditional core bond indexes. The strategy’s asset allocation is constantly evaluated from a number of levels including a top-down view, bottom-up credit perspectives, and a dedicated portfolio construction group. These groups continually work together to identify the best relative values in the market based on their macroeconomic views and credit market conditions. One of the main dials utilized in managing the portfolio’s risk, is credit exposure. In strong markets, exposure to credit risk will increase, as will exposure to credit sectors with greater beta, and vice versa.

 

Neuberger Berman

 
Devens
Derek Devens

Strategy: Option Income
Target Allocation: 20%

Read the full manager bio

The strategy writes out-of-the-money put options on U.S. stock indices, primarily the S&P 500® Index and the Russell 2000® Index, and invests the collateral in a portfolio of short-duration U.S. government securities. Income comes from both the receipt of option premia, as well as from interest earned on the collateral. The team diversifies the option portfolio across multiple dimensions (e.g., strike price, expiration date) to reduce path dependency and manage risk, while also attempting to increase capital efficiency in rising equity markets by buying back low-value options and recycling the proceeds into new higher-premium positions.

 

Monthly Performance as of 11/30/19

        Average Annual Total Return
Monthly Performance as of 11/30/19 One Month Year to Date 12 Month Total Return 3 Year Average 5 Year Average Since Inception 9/28/18
Litman Gregory Masters High Income Alternatives Fund (Institutional Class 9/28/18)
0.33% 7.46% 5.20% n/a n/a 3.54%
Litman Gregory Masters High Income Alternatives Fund (Investor Class 9/28/18)
0.40% 7.30% 5.04% n/a n/a 3.39%
Bloomberg Barclays Aggregate Bond Index
-0.05% 8.79% 10.79% n/a n/a 8.95%
HFRX Fixed Income – Credit Index
0.30% 4.76% 3.27% n/a n/a 1.35%
ICE BofAML U.S. High Yield TR USD Index
0.27% 12.07% 9.61% n/a n/a 5.84%

 


Quarterly  Performance as of 9/30/2019

        Average Annual Total Return

Quarterly Performance as of 9/30/2019
One Month Year to Date 12 Month Total Return 3 Year Average 5 Year Average Since Inception 9/28/18
Litman Gregory Masters High Income Alternatives Fund (Institutional Class 9/28/18)
0.65% 6.83% 3.55% n/a n/a 3.53%
Litman Gregory Masters High Income Alternatives Fund (Investor Class 9/28/18)
0.62% 6.63% 3.34% n/a n/a 3.32%
Bloomberg Barclays Aggregate Bond Index
-0.53% 8.52% 10.30% n/a n/a 10.24%
HFRX Fixed Income – Credit Index
0.49% 3.59% 0.44% n/a n/a 0.44%
ICE BofAML U.S. High Yield TR USD Index
0.32% 11.50% 6.30% n/a n/a 6.31%

Expense Ratios*

  MAHIX MAHNX
Inception Date 9/28/2018 9/28/2018
As Of Date 4/30/2019 4/30/2019
Total Operating Expenses (%) 1 1.70 1.96
Gross Expense Ratio (%) 2.06 2.34

 

1 - The Advisor is contractually obligated to waive management fees and/or reimburse ordinary operating expenses through April 30, 2020. The total operating expense includes Acquired Fund Fees and Expenses of 0.72%, which are not typical operating expenses.

Net Operating Expenses (%) Exclusive of 0.72 Acquired Fund Fees & Expenses: MAHIX: 0.98 MAHNX: 1.24

* Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced. The gross and net expense ratios can be found in the most recent Summary Prospectus (4/30/2019). There are contractual fee waivers in effect through 4/30/2020.

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. Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced. Short term performance is not a good indication of the fund’s future performance and should not be the sole basis for investing in the fund.

Calendar Year Performance

  2018
Litman Gregory Masters High Income Alternatives Fund (Institutional Class 9/28/18)
-3.08%a
Bloomberg Barclays Aggregate Bond Index
1.64%a
HFRX Fixed Income - Credit Index
-3.05%a
ICE BofAML U.S. High Yield TR USD Index -4.67%a

a Performance from 9/28/2018 - 12/31/2018

Fund Facts

Inception Date: 9/28/2018
Cusip Number: 53700T 876
Ticker Symbol: MAHIX
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

  MAHIX MAHNX
Inception Date 9/28/2018 9/28/2018
As Of Date 4/30/2019 4/30/2019
Total Operating Expenses (%) 1 1.70 1.96
Gross Expense Ratio (%) 2.06 2.34

 

1 - The Advisor is contractually obligated to waive management fees and/or reimburse ordinary operating expenses through April 30, 2020. The total operating expense includes Acquired Fund Fees and Expenses of 0.72%, which are not typical operating expenses.

Net Operating Expenses (%) Exclusive of 0.72 Acquired Fund Fees & Expenses: MAHIX: 0.98 MAHNX: 1.24

* Investment performance reflects fee waivers in effect. In the absence of such waivers, total return would be reduced. The gross and net expense ratios can be found in the most recent Summary Prospectus (4/30/2019). There are contractual fee waivers in effect through 4/30/2020.

Ares Alternative Equity Income Strategy (as of 9.30.19)

Brown Brothers Harriman Credit Value Strategy (as of 9.30.19)

Guggenheim Multi-Credit Strategy (as of 9.30.19)

Neuberger Berman Option Income Strategy (as of 9.30.19)

 

 

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 High Income Alternatives Fund Commentary, 3rd Quarter 2019

The end of the third quarter marks the fund’s one-year anniversary. The return since inception is 3.49%, compared to 10.30% for the Bloomberg Barclays U.S. Aggregate Bond Index, and 6.34% for the BofA Merrill Lynch US High-Yield Cash Pay Index. We think there’s more to the story than a quick look indicates. ›› 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.