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Brinker Capital Shutters Trio Of Absolute Return Funds

In 2009, Brinker Capital launched the Brinker Capital Crystal Strategy I, which, according to Brinker, was one of the world’s first absolute return strategies packaged in the Separately Managed Account (“SMA”) format. Five years later, the firm launched three alternative mutual funds, each based on the SMA strategy, but with varying investment objectives. Now, just over two years later, all three funds are shutting down, according to a February 22 filing Brinker made with the Securities and Exchange Commission (“SEC”). The three funds in question, all categorized by Morningstar as multi-alternative funds, are the Crystal Strategy Absolute Income Fund (MUTF: CSTFX ), the Crystal Strategy Absolute Return Fund (MUTF: CSRAX ), and the Crystal Strategy Leveraged Alternative Fund (MUTF: CSLFX ). CSTFX sought to provide current income and downside protection to conventional equity markets with absolute (positive) returns over full market cycles as a secondary objective; CSRAX pursued positive (absolute) returns over full market cycles; and CSLFX sought long-term positive absolute return with reduced correlation to conventional equity markets as a secondary objective. Shortly after the three funds were launched in December 2013 , Brinker Capital Vice Chairman John Coyne said, “We had high expectations for Crystal Strategy when we launched it four years ago, but the reception of financial advisors and their clients to the product surpassed anything we could have imagined.” Mr. Coyne also said the funds were launched in response to investor requests, but for the year ending January 31, 2016, all three funds ranked in the bottom 15% of their category: CSTFX posted one-year returns of -9.09% (bottom 15%), CSRAX returned -10.42% (bottom 10%), and CSLFX returned -16.99% (bottom 1%). Thus, it’s no surprise that Brinker decided that it was in the best interests of shareholders to terminate the funds’ operations. According to the SEC filing, all three funds stopped accepting new investors on February 23, and all shares will be liquidated as of March 18. Jason Seagraves contributed to this article.

Do You Need To Buy At Market Bottoms To Get Profitable Results?

By Ronald Delegge Legendary speculator Bernard Baruch once quipped: “Don’t try to buy at the bottom and sell at the top. It can’t be done except by liars.” Baruch was on to something. And since reams have been written and said about tops and bottoms in both individual securities along with broader markets, we can’t help but ask: Does a person need to buy at the absolute bottom to turn a profit? Hit the rewind button to July 15, 2015, when via ETFguide’s Weekly Picks we wrote the following timestamped ETF trade alert to premium members: Mining stocks are in puke territory and trading 15% below their 50 and 200-day moving average. The Market Vectors Gold Miners ETF (NYSEARCA: GDX ) is oversold and market sentiment is presently overly bearish. We’re buying GDX at current prices near $16.50. Buying depressed out-of-favor assets takes guts, but with enough patience and time, the results can be rewarding. Since our GDX trade alert on Jul. 15, GDX has been dead money and it wasn’t until Jan. 19, 2016 when GDX hit a rock bottom closing price at $12.47. The rest of the global gold mining sector too, went straight into the toilet. And now comes the fun part. Click to enlarge Since GDX’s closing bottom on Jan. 19, the fund has soared +46.05% compared to just a +2.87% gain for the S&P 500. But wait, there’s more. Our GDX position – which we did not buy at the market bottom – is now ahead by a respectable +18.11% (see chart above) and it’s still an open trade. Only a greedy slob would be unhappy with that kind of return in this kind of market. It also explicitly proves that you don’t have to buy at market bottoms to turn a profit. I would argue that having stamina, stomach, and patience (SSP) are far more important than buying stocks or whatever else at the bottom. Why? Because even a trader or investor that buys at the bottom but lacks SSP, will inevitably self-destruct. And besides that, nobody but “liars” consistently buys at market bottoms – nobody . Another real life example – and one of the most extreme cases I’ve ever seen – that buying at market bottoms isn’t a prerequisite to achieving great profits is a Portfolio Report Card I did on my Index Investing Show podcast for a 72-year old man with a $26.9 million portfolio. What did he own? This particular guy invested in biotech stocks right before the 1987 stock market crash. Bad timing. He also bought Apple (NASDAQ: AAPL ) a few years later in 1991 which again was really bad timing. It was such bad timing that ten years later, he was down 25% on his original investment in Apple! Instead of bailing, his SSP (stamina, stomach, and patience) kept him in the game and legendary results followed. Even though he missed several market bottoms in Apple, he was still able to turn an $84,000 investment into over $8 million. In summary, if you want profitable investment results, stop focusing on tops and bottoms and start cultivating SSP. Disclosure: No positions Link to the original post on ETFguide.com

How Big Is Managed Futures’ AUM, Exactly?

By The Alts Team We tweeted the other day that Managed Futures mutual funds had seen 20 straight months of inflows, and that got us to thinking it was high time to do our annual look at how many assets there are under management in the managed futures industry. Now, for those who don’t know – we have a bit of a problem with the usual numbers reported as assets under management in the space by BarclayHedge, who include the world’s largest hedge fund Bridgewater in the managed futures asset total. In our opinion, this does a disservice to investors, vendors, and business people in the industry trying to gauge the size of the space and where they fit into it. Add to that the fact that Winton is a $30 Billion+ manager who tends to dominate the asset raising in the space, and it’s not too big of a stretch to say the majority of assets as reported by BarclayHedge are from just two firms (Bridgewater and Winton). That’s led us to pick apart the numbers a bit and report what the “real” assets and asset growth look like without those two stalwarts (one of which is not managed futures based at all). Without further ado, here’s what the rest of the space looks like: What about the Growth in assets: Here’s where things get interesting, because while stripping out Bridgewater and Winton in years past showed a shrinking industry (the “field”) without those two big dogs, 2015 showed quite the opposite. The so-called “field” added around $18 Billion in 2015 (22% growth), although we can see from the graphic that assets are still down from their 2008 levels with the growth just negative since then. Assets of “the field” grew by 22% in 2015. Assets of “the field” is still down $4 Billion since ’08. “The field” raised $22 Billion in the final 3 quarters of ’15. AQR is, for now, a member of our ‘field’, but at $10.9 Billion and $2.6 billion raised in 2015, may need to be split out in the near future. What’s the takeaway? The larger takeaway is that investors who seemingly forgot about the 2008 financial crisis and how well managed futures do in such periods are starting to remember where they put the diversification keys… and are starting to put real money to work with real managers , not just the Wintons and AQRs of the world – who need more assets like a hole in the head. Here’s to more growth ahead, not just from investors allocating funds, but from the managers multiplying those funds via their trading strategies as well.