FVAM Investment Fund

Fanvestments FVAM Diversified Multi-Asset Private Alternative Investment Fund (FVAM)

 

>> Full prospectus available from the Fanvestments main site @ FVAM Fund Prospectus

Summary overview:

 

PRINCIPAL INVESTMENT STRATEGY

 

The FVAM Fund consists of a portfolio, a collection of assets, with a majority focus on equity investment (“stocks”) for the goal of price & capital appreciation, growth and value, portfolio stability and dividends, and to drive long-term positive durable returns through all types of economic and global financial cycles. Price tends to trump timeframe, but fund does expect to hold most investments mid-to-long term, with a target range of 1-4 years, some shorter, some longer. The Fund is actively-managed and has a blended investment style, looking for Value plus growth, and will also seek to find opportunity within event-driven strategies, searching all size business all around the world, but currently limited to only investing within U.S. stock exchanges. Exposure and strategy will change from time to time, as opportunity of making money necessitates. To mandate diversification, individual stock positions are mostly limited to less then 5% of the overall portfolio, with current averages at 2-3% per position. The 5% holding max could have an exception if the position, asset, is not a “single-stock” investment, with the same examples as above, possibly within another diversified ETF, or maybe short-term bond exposure. The fund is averaging 25-35 individual stock (“equity”) holdings currently, the primary horsepower for returns, plus the dividends some stocks yield back. The fund does use multiple hedging strategies to protect from general stock market volatility, as well as downside risk within the individual positions, or macro issues such as commodities, currencies, and economic cycles. Since FVAM is not intending to match the assets of any other index or ETF, fund’s performance will not have intension to directly match the performance of any other investment vehicle, ETF, or Index. An index, like the S&P 500, is also a collection of assets, currently with just over 500 individual stock holdings, with a daily-monthly-yearly total return. FVAM’s intent is to have created its own index, hence, become its own market, with individual assets selected by Fanvestments Management, non-correlated performance, less volatility, utilizing a dynamic perpetually improving investment strategy. Including a hedging strategy utilizing options, that has its own goal to create positive yield in the face of falling markets and prices. The fund also uses option strategies within the individual equities, such as covered calls, to generate additional yield per position, while adding a small level of protection (“negative delta”) to help protect from downside in price of that asset/equity/stock. FVAM is constantly running analysis on the stock positions within, to make sure when Time and Price are appropriate, when the price of that asset becomes overpriced, overvalued, or if the profits from such position are large enough by design, “Greed will be Sold”. So the fund can look to move to the next underpriced asset, with the goal to initiate a new investment somewhere else, and in some cases, deploying a “Buy the Blood” strategy, attempting to buy low, and sell much higher. The fund will also look for opportunity in other ways, sometimes just straight growth or momentum, or possibly adding exposure to the overall “markets” by utilizing a market ETF.

     For Volatility control, one strategy the fund is using (coupled with diversification) is analyzing the mathematics, stats, behind the performance of the fund, as well as the S&P500 (other indexes and ETF’s will be added in the future), as well as all the relative averages that come along with comparing back and forth. One example is standard deviation, measuring the volatility, the up & down, from day to day, week to week. By forcing the portfolio’s deviation to be less then the S&P500, the fund should continue to be less volatile then that market being compared. Lately, management has been utilizing the “markets” mathematics to project future market action, adding this to any hedging strategies to always make the attempt to right-size, trying not to over-hedge thru less volatile times, and proactively ready to protect more when volatility picks up. Fund also sometimes deploys micro, swan-like, hedges, using just basis points of the portfolio, but explode to produce 100’s of basis points when an extreme event actually occurs, though are generally binary and can go to zero which is reason for micro-if any exposure only. The optimal goal is for the hedge exposure to return enough gains in a certain day or week, to cover the downside of the total long exposure on days when the overall market drags everything down regardless of correlation, and for the hedge exposure to stay out of the way when the long exposure is working, and going higher in value. Below screenshot shows actual internal data from February 2016, that is created, monitored, dissected, and over analyzed over and over, with the goal of perpetual improvement.
Better Investments, Better Mathematics, Decrease Downside, Increase Upside, perpetually, FOREVER.

Primary study for stock investments starts more bottoms up, with a view on the fundamentals of the business (revenue, earnings, valuation, growth rate, price to book, etc.) along with Technical Analysis, looking at price action, velocity and strength of price movements of different timeframes, inflection and capitulation, as well as trend, momentum, fund flows, and monitoring unusual action within the Options and Futures Markets. This is coupled together with an overall macro study of the Global Markets (US, Asia, Europe), Finance, and Global Economics. As value and growth are very important, the fund is looking for additional reasons to have enough conviction to make and/or keep the investment. Future growth, rate of future growth year-over-year, activist investment, follow the money flows, limited downside expectations, options action, price and valuation compared to historical price and valuation, industry consolidation are just some areas for study to find multiple catalysts for higher rates of future returns. Even when all the numbers line up, and the price seems to be a great opportunity, timing and execution become the final step. The Goal is to bring everything together, find the opportunities that have the best potential for the best return, protecting the portfolio as a whole against market downside and turmoil, and for the fund, FVAM, to provide steady returns with less volatility then general stock market index investing.

Investment approaches and techniques pursued by the Fund can be of an extremely wide range. Major categories include (but not limited to) and in most cases combined in some way :

  • fundamental long — involves buying equites (“stocks”) believed to be under-priced relative to their potential value based on fundamentals such as revenue, earnings, growth and peg rates, book value.

 

  • relative value — seeks to profit from relative mis-pricing of related financial instruments relative to each other or historical norms. These strategies may apply qualitative or quantitative analysis and typically are not dependent on the general direction of broad market movements.

 

  • technical analysis — buying equites where technicals show buy points such as major inflection in volume, capitulation, relative strength, stochastics, oversold-overbought indicators, support and resistance price levels, speed and strength of trend, and using technical patterns to project future price moves

 

  • event driven — seeks to take advantage of information inefficiencies resulting from a particular corporate event. The Fund at times will take positions in companies that are expected to become the subject of takeovers, liquidations, bankruptcies, tender offers, buybacks, spin-offs, exchange offers, mergers or other types of corporate reorganizations in the hope of profiting on results from the specific event. The goal of this strategy is to profit when the price of a security changes to reflect more accurately the likelihood and potential impact of the occurrence, or non- occurrence, of an extraordinary event. If the event fails to occur or it does not have the effect foreseen, losses can result.

 

  • directional macro — seeks to profit in changes from macro-level exposures, such as broad securities markets, interest rates, exchange rates and commodities.

 

 

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