The fund launched in February of 2016, and began investing on September, 30, 2016, the eve of a precipitous decline in bond prices, driven principally by the marked selloff in US treasuries
with the aim of progressively building exposure to fixed income and equity positions per the strategy outlined above.
As of December 31, 2016 the fund was substantially under-allocated with cash holdings comprising 61% of Net Asset Value.
The rationale for the maintenance of the high cash position through the 4th quarter was in keeping with the fund's overarching mandate to prioritize capital preservation over income and capital growth.
In the 4th quarter volatility and risk associated with what appeared to be a bottoming (at least for the short term) of US treasury rates in July presented limited attractive opportunities in credit or fixed income duration, particularly in light of the uncertainty associated with the looming US presidential election.
In hindsight, the conservative position was warranted. US treasuries experienced their worst selloff since the May 2013 "taper tantrum", with the US 10y widening over 85 basis points (an 8-9% capital loss) in the period between September 30-December 31, 2016.
The fund's performance for the 3 months ending December 31, 2016 was a net loss after expenses of 1.45%. On a monthly basis the fund's performance was -.76% in October, -.89% in November and .19% in December. The fund targets absolute returns and does not seek out performance against prevailing benchmarks. Comparatively, however, in the corresponding 4th quarter period, the Barclays Aggregate Bond Index (AGG) returned -3.87% and the S&P 500 returned 3.25%