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Miles Capital Launches Fund Of Alternative Funds

The recently launched Miles Capital Alternatives Advantage Fund has an interesting approach to multialternative investing: it gains its exposures by bundling other alternative mutual funds and ETFs. The fund, which launched on March 14, is available in N (MUTF: MILNX ) and I (MUTF: MILIX ) share classes, with respective net-expense ratios of 3.24% and 2.99% (this includes 1.24% of acquired fund fees from the underlying funds), and initial investment minimums of $2,500 and $50,000. Allocation Across Multiple Strategies The Miles Capital Alternative Advantage Fund’s investment objective is to provide long-term capital returns with less volatility than U.S. equity markets. It pursues this end by means of investing in mutual funds and ETFs employing the following strategies: Long/short equity Long/short credit Market neutral Arbitrage Global macro Moreover, the fund may invest in mutual funds and ETFs that bundle alternative assets, in addition to strategies. These assets may include commodities and commodity-linked instruments, currencies, real estate and other real assets, and illiquid private placements and distressed assets. For more information, read the fund’s prospectus . Fund of Funds Approach Although the “fund of funds” approach is common among hedge funds, “funds of alternative mutual funds and ETFs” are less so. Still, the Miles Capital Alternatives Advantage Fund isn’t the first. Three of the best performing funds from the group that came before it include: Of the three, CAALX is the largest in terms of assets under management (“AUM”), at $460 million. LPTAX was second, at $227 million AUM; while GASAX was the smallest, at $90 million AUM. How have these “funds of alternative funds” performed? In terms of their 3-year returns through February 29, CAALX was tops at +3.76%, which was good enough to rank in the top 7% of Morningstar’s Multialternative category. LPTAX’s 3-year returns stood at 2.73%, which put it in the top 15%. And GASAX returned 2.05% for the 3-year period ending Leap Day 2016, putting it in the top 23% of its peers. Past performance does not necessarily predict future results. Jason Seagraves contributed to this article.

The Best And Worst Of February: Market Neutral Funds

The 68 mutual funds and ETFs in the market neutral category averaged modest gains of 0.08% in February while flows to the category turned positive for the first time since September 2014. The Vanguard Market Neutral Fund (MUTF: VMNIX ) was February’s biggest recipient of inflows, at roughly $279 million, while the AQR Diversified Arbitrage Fund (MUTF: ADAIX ) suffered the month’s steepest outflows at $295 million. Neither of the funds, which posted respective February returns of 1.55% and 1.33%, ranked in the top or bottom three performers for the month, though. Best Performers in February The three best-performing market neutral funds in February were: The QuantShares US Market Neutral Value Fund was February’s top-performing fund, returning +3.83%. Unfortunately, for shareholders, the fund’s one-year performance through February 29 stood at -6.35%, ranking in the bottom 13% of the category. For the three years ending Leap Day 2015, CHEP returned an annualized -0.52%. Its February outperformance is evidence of its more-volatile-than-average nature, with a one-year standard deviation of 6.45% compared to the category average of 4.81%. On a three-year basis, CHEP looks even less predictable, with annualized volatility of 7.70% compared to the category average of 4.25%. The Cognios Market Neutral Large Cap Fund, by contrast, returned a solid +2.45% in February and had one-year returns of +11.07% through the end of the month. Those annual gains were good enough to rank in the top 7% of its peers, and its three-year annualized returns through February 29 stood at an impressive +9.57%, ranking in the top 4% of the category. For the past year, COGIX has been even more volatile than CHEP, with a standard deviation of 8.01%. But COGIX’s one- and three-year alphas of 7.60% and 9.62% – relative to the returns of the Barclays U.S. Aggregate Bond Total Return Index – more than make up for its outsized volatility. Finally, the Causeway Global Absolute Return Value Fund) ranked third in February, with returns of +2.40%. Its annual returns through the end of the month stood at a less impressive -0.48%, ranking it near the middle of the category. Over the longer term, however, CGAIX’s three-year returns of +4.11% were good enough to rank in the top 11% of market neutral funds over that time span. Worst Performers in February The three worst performing market neutral funds in February were: Mother’s Day comes in May, but February was unkind to MOM. The QuantShares US Market Neutral Momentum Fund, which sports the “MOM” ticker symbol, was the worst performer of its kind last month, losing 6.14%. Nevertheless, the ultra-volatile MOM – with its annual standard deviation of 12.66% – was still up 10.68% for the year, as of February 29, and its three-year annualized returns through that date stood at +3.24%. The TFS Market Neutral and BlackRock Global Long/Short Equity funds tied as the second-worst market neutral performers in February, with one-month returns of -3.97%. The funds’ one-year returns were also uninspiring at -6.85% and -6.75%, respectively. But over the three-year period, the BlackRock fund’s annualized gains of 2.89% greatly outdid the TFS fund’s annualized losses of 0.84%. Past performance does not necessarily predict future results. Jason Seagraves contributed to this article.

Riskier Bond ETFs For A More Dovish Fed Outlook

By Max Chen and Tom Lydon With the Federal Reserve holding interest rates and only anticipating two rate hikes this year, fixed-income investors may turn to riskier debt securities and related exchange traded funds, reports industry analyst ETF Trends . The Fed’s dovish stance sent the U.S. dollar retreating, with the Dollar Index down about 1.9% since the Fed’s Wednesday announcement. “Any weakening of the U.S. dollar will support emerging markets that have issued U.S. denominated debt and will take pressure off of China’s need to manage their currency,” Matthew Whitbread, investment manager at Baring Asset Management, said on CNBC . “This would bode well for investors able to allocate to select emerging market currencies and local bond markets.” Fixed-income investors may gain exposure to U.S. dollar-denominated emerging market debt through ETF options. For instance, the iShares J.P. Morgan USD Emerging Markets Bond ETF (NYSEARCA: EMB ) has a 7.01 year duration and a 5.30% 30-day SEC yield. The PowerShares Emerging Markets Sovereign Debt Portfolio (NYSEARCA: PCY ) has a 8.34 year duration and a 5.90% 30-day SEC yield. The Vanguard Emerging Markets Government Bond ETF (NASDAQ: VWOB ) has a 6.2 year duration and a 4.95% 30-day SEC yield. Year-to-date, EMB rose 3.9%, PCY gained 3.6% and VWOB returned 3.4%. Additionally, with emerging market currencies appreciating against the greenback, local-currency emerging market bond ETFs have also been outperforming. For local currency-denominated emerging market bond ETFs, the iShares Emerging Markets Local Currency Bond ETF (NYSEARCA: LEMB ) has a 4.77 year duration and a 4.73% 30-day SEC yield. The Market Vectors Emerging Markets Local Currency Bond ETF (NYSEARCA: EMLC ) has a 4.76 year duration and a 5.95% 30-day SEC yield. The actively managed WisdomTree Emerging Markets Local Debt Fund (NYSEARCA: ELD ) has a 5.01 year duration and a 5.89% 30-day SEC yield. Year-to-date, LEMB increased 3.7%, EMLC advanced 6.6% and ELD gained 5.3%. “Overall, a more dovish Fed should support risky assets, in particular high yield credit that benefits both from falling yields as well as economic growth,” Whitbread added. For instance, over the past two days, the SPDR Barclays High Yield Bond ETF (NYSEARCA: JNK ) was up 1.7% and the iShares iBoxx $ High Yield Corporate Bond ETF (NYSEARCA: HYG ) was 1.2% higher. JNK has a 4.26 year duration and a 7.28% 30-day SEC yield. HYG has a 4.01 year duration and a 7.26% 30-day SEC yield. Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.