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Wednesday, June 12, 2013

A Hedge Fund Transforms Into A Mutual Fund

Reported by Nicole Spector

BTS Asset Management[profile] has made the old switcharoo to one of its funds.

The Lexington, Massachusetts-based firm announced that the conversion of the BTS Tactical Fixed Income Fund (BTFAX) from a hedge fund to a 1940 Act mutual fund.

The company made the change in light of the goal to have the fund maximize total return and deliver equity-like returns with traditional bond-like risk. The newly converted fund will target tactical investing in high yield bonds, U.S. government bonds, and cash.

Company Press Release

BTS Tactical Fixed Income Fund LLC Converts to Mutual Fund

Tactical Allocation Bond Investment Approach Offers Investors Access and Liquidity to a Hedge Fund Strategy

LEXINGTON, MA--(Marketwired - June 11, 2013) -  BTS Asset Management announced today the conversion of the BTS Tactical Fixed Income Fund LLC from a hedge fund to a 1940 Act mutual fund. The BTS Tactical Fixed Income Fund (NASDAQ: BTFAX) (NASDAQ: BTFCX) has a goal to maximize total return and seeks to deliver equity-like returns with traditional bond-like risk. The Fund rotates bond classes that BTS believes have the highest return potential while implementing stop-loss measures in an attempt to control downside risk via BTS Asset Management's proprietary trend indicator model.

Said Isaac Braley, president of BTS Asset Management, "By converting to a mutual fund, individual investors can access a hedge fund strategy with the structure, liquidity and transparency of a traditional mutual fund." Many income-focused investors are discouraged with the historic low yields offered by many fixed income type investments, and now they are also concerned with what could happen to bond prices in a rising rate environment. Even in such cases, the BTS Tactical Fixed Income Fund is designed to help investors find a fixed income solution for their investment portfolios.

"Typically, hedge fund investments have only been available to wealthy individuals or institutional investors. We think retail investors are likely to discover the potential benefits of tactical investing, especially when guided by their investment advisor," said Matthew Pasts, CEO of BTS Asset Management. "Our tactical approach tries to avoid major drawdowns and deliver steady returns over time."

Unlike traditional bond funds that invest primarily for income, the BTS Tactical Fixed Income Fund employs BTS Asset Management's long history of tactical investing in High Yield bonds, U.S. Government bonds, and cash. The tactical allocations allow the Fund to increase exposure to bond sectors when indicators are positive and to decrease exposure when indicators are negative. Given this total return approach, BTS sees bonds as an integral part of an investor's portfolio even in a rising interest rate environment.

Isaac Braley states, "We seek to focus on the right bond asset class at the right time versus a widely diversified bond approach. We believe that investing in bonds with low correlations to one another can offer upside potential and downside protection. Our approach seeks to create a better sequence of returns for steady income over time." BTS Asset Management announced the opening of a similar fund, the BTS Tactical Fixed Income VIT Fund offered through Nationwide America's Marketflex, on May 1, 2013.  

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