A new mutual fund firm just packaged its own take on passive investing via a balanced mutual fund. On Friday Nashville-based 7Twelve Advisors [see profile] launched its 7Twelve Balanced Fund [see prospectus]. And 7Twelve already has a group of advisors to distribute through.
The RIA and the fund take their name from 7Twelve strategy developed by Craig Israelsen, an associate professor at Brigham Young University and chief investment officer to the RIA. The strategy (which 7Twelve uses for non-mutual fund investments as well as in its new fund), entails investing in seven asset categories and twelve sub-categories. 7Twelve invests an equal slice of the portfolio into indexes for each of the following 12 categories: U.S. large cap stocks, U.S. mid-cap stocks, U.S. small-cap stocks, non-U.S. developed markets equity, emerging markets equity, real estate, natural resources, other commodities, U.S. aggregate bonds, TIPS, international bonds and U.S. money markets.
"The 7Twelve model is a straight-forward and transparent recipe for building a balanced fund," Israelsen stated. "It's based on repeatable simple logic, not special skill."
7Twelve president Andrew Martin, who also PMs the fund, added that "true diversification comes from investing in each of the major asset classes." Martin confided that Israelsen has distributed information on the strategy to a number of advisors for several years through a newsletter. All told, Martin estimates that there are about 300 advisors nationwide (half RIAs, the other half brokers with wirehouses or independent broker-dealers) who use Israelsen's 7Twelve strategy, and they were asking for a mutual fund version.
The new fund offers A shares for a 350-basis-point load and a 125-bps expense ratio. Union Bank serves as the fund's custodian, Northern Lights Distributors as its distributor and Gemini Fund Services as its transfer agent. Thompson Hine provides legal counsel and BBD handles accounting.
Company Press Release
NASHVILLE, Tenn., April 5, 2011 -- 7Twelve Advisors, LLC announced the launch of the 7Twelve™ Balanced Fund (NASDAQ: SEVNX). The Fund seeks to provide superior risk-adjusted returns when compared to the bond and equity markets within a balanced fund structure.
"7Twelve" refers to a diversified investment strategy of 7 asset classes: US stocks, non-US stocks, US bonds, non-US bonds, real estate, commodities and cash, and further sub-divided into twelve equally weighted index-based funds.
"The 7Twelve model is a straight-forward and transparent recipe for building a balanced fund. It's based on repeatable simple logic, not special skill," said Craig L. Israelsen, PhD, founder of the 7Twelve™ strategy and Chief Investment Officer of 7Twelve Advisors, LLC.
The fund's assets are equally weighted, so performance does not rely on forecasting or timing. The managers believe that index-based funds and passive management are more reliable investment methods than typical actively managed funds. Assets are rebalanced on a periodic basis.
The 7Twelve™ Balanced Fund offers advisors and investors access to a fully diversified portfolio in one fund. As a rationale for the strategy, portfolio manager Andy Martin claims, "The market losses of 2008, and the nine years preceding it -- the worst 10 years in market history -- showed us that stocks and bonds are not the answer to every investment question. True diversification comes from investing in each of the major asset classes."
For more information about the 7Twelve™ Balanced Fund please visit www.7TwelveBalancedFund.com.
7Twelve Advisors, LLC is an SEC Registered Investment Advisor in Nashville, TN, and serves as investment adviser to the 7Twelve™ Balanced Fund.
Craig Israelsen, PhD., Associate Professor at Brigham Young University in Provo, Utah is Chief Investment Officer of the adviser and developer of the 7Twelve strategy.
Andrew Martin, President of 7Twelve Advisors, LLC, serves as portfolio manager of the 7Twelve™ Balanced Fund. He holds a B.B.A. in economics from Belmont University and a Masters Degree in liberal arts from Vanderbilt University. He holds series 7, 24, 53, 63 and 66 securities licenses, and is a member of the Investment Management Consultants Association.
For more information about 7Twelve Advisors, LLC, call 615-341-0712 or visit www.7TwelveAdvisors.com
Investors should carefully consider the investment objectives, risks, charges and expenses of the 7Twelve™ Balanced Fund. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling 877-525-0712. The prospectus should be read carefully before investing. The 7Twelve™ Balanced Fund is distributed by Northern Lights Distributors, LLC member FINRA. 7Twelve Advisors, LLC is not affiliated with Northern Lights Distributors, LLC. 0612-NLD-3/31/2011
Investing in the commodities markets through commodity-linked ETFs will subject the Fund to potentially greater volatility than traditional securities. Commodity prices are influenced by unfavorable weather, animal and plant disease, geologic and environmental factors as well as changes in government regulation such as tariffs, embargoes or production restrictions. In addition to the risks generally associated with investing in securities of foreign companies, countries with emerging markets also may have relatively unstable governments, social and legal systems that do not protect shareholders, economies based on only a few industries, and securities markets that trade a small number of issues. Each ETF is subject to specific risks, depending on the nature of the ETF. These risks could include equity risk, liquidity risk, sector risk, foreign and emerging market risk, as well as risks associated with fixed income securities. The value of the Fund's investments in bonds and other fixed income securities will fluctuate with changes in interest rates. Foreign investing involves risks not typically associated with U.S. investments, including adverse fluctuations in foreign currency values, adverse political, social and economic developments, less liquidity, greater volatility, less developed or less efficient trading markets, political instability and differing auditing and legal standards. Increases in real interest rates can cause the price of inflation-protected debt securities to decrease. Interest payments on inflation-protected debt securities can be unpredictable. The Fund's exposure to companies primarily engaged in the natural resource markets may subject the Fund to greater volatility than the securities market as a whole. Real estate values rise and fall in response to a variety of factors, including local, regional and national economic conditions, interest rates and tax considerations. The value of a small or medium capitalization company stocks may be subject to more abrupt or erratic market movements than those of larger, established companies or the market averages in general.