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Rating:Ex-Naval Officers to Launch an Alt Fund Not Rated 5.0 Email Routing List Email & Route  Print Print
Monday, January 07, 2013

Ex-Naval Officers to Launch an Alt Fund

Reported by Tommy Fernandez

It appears that one can learn a lot of life lessons application to investing by protecting America's interest on the seven seas.

Advisors Preferred [profile] is prepping to launch, a total return product, dubbed the OnTrack Core Fund.

According to the filing, the fund will seek to achieve "total return while keeping the fund's volatility and downside risk below that of major equity market indices."

The first notable element of this proposed fund is the sub-advisor team: Price Capital Management.

The firm, based in Gulf Breeze, Florida, has over ten years investing experience and had, as of November 30, 2012, over $350 million in assets under management.

The PMs at this firm are Michael Price and W. Lee Harris, Jr..

Price, who has served as president of the firm since he founded it in 1997, served in the U.S. Navy from 1963 to 1994. He served for 23 years as a Navy pilot, retiring with the rank of Captain.

In 1993, he formed Investors OnTrack, Inc., to provide training for high net worth individual investors and professional investors, with an emphasis on technical analysis.   In 1995, he began publishing the OnTrack Report, a weekly newsletter for mutual fund investors.  In 1997, he formed Price Capital Management to manage individual accounts using mutual funds.  Price Capital Management currently manages four hedge funds in addition to the OnTrack Core Fund using a similar investment strategy.

Meanwhile, Harris has served as a PM, as well as chief compliance officer, at Price since February 2012. He also serves as president of his own firm, Lee Harris Capital. Harris himself served in the U.S. Navy from 1974 to 2004.

The second notable element to this fund is its investment strategy, which is described in the SEC filing as follows:
The sub-advisor will use a flexible investment approach that emphasizes capital preservation, but allows the portfolio managers to adopt a less conservative posture and to increase emphasis on capital appreciation when they believe the additional risk is warranted by favorable market conditions.  The sub-adviser seeks to achieve the Fund's investment objective by investing long-or-short primarily in stocks, bonds and commodities using the sub-adviser's technical and risk control strategies.

The fund will invest in a variety of assets, including: individual stocks; stock mutual funds and ETFs; swap contracts; limited partnerships; bond funds and ETFs as well as commodity ETFS and futures contracts, among many others.

On the subject of credit quality, the SEC filing says that:
These investments may include significant allocations to lower quality rated corporate debt commonly known as "junk bonds."  Junk bonds are generally rated lower than Baa3 by Moody's Investors Service ("Moody's") or lower than BBB- by Standard and Poor's Rating Group ("S&P").  Bonds include mortgage-backed securities ("MBS").

Price Capital will be paid 250 basis points for its advisor fee.

 

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