Alternative fund-of-funds strategy promises investors minimal risk at a low cost
In its aim to protect money during market shocks and downturns while also producing equity returns during normal periods, True Exposure Investments has introduced TruX Exogenous Risk Pool (TERP), a North American equity fund.
“The investment industry relies on past volatility as a sign of risk, but key risks do not always appear in track records,” said Jim Fraser, President of True Exposure Investments. “Examples include hidden risk such as illiquidity or government policy changes; timing risk when something normally manageable occurs at the worst time; and systemic risk where one event triggers cascading failures,”
Inukshuk Capital Management, the portfolio manager, employs an all-weather approach that combines three strategies.
The first two, a Behavioural Strategy and a Specialty Assets strategy, are designed to mitigate losses during down-markets. They are complemented by a Tactical Equity strategy, which is aimed at boosting profits during ordinary markets.
The strategies are implemented through the use of eight well-known ETFs.
Banking crises, political upheaval, energy or food shortages, catastrophic pandemics, and terrorist attacks have all created external market shocks in the past. Cyber-attacks on infrastructure, such as hospitals and power grids, create a new potential threat.
Investors are aware of these dangers and are concerned about how their portfolios will fare during times of financial and personal hardship.
If correlations between asset classes rise, as they frequently do, relying simply on diversification for protection is a mistake. TERP promises to be an alternative that comes with low to medium risk, is priced daily, and has a 0.85 percent management fee.
