Applying the DRS to stocks of the 500 Largest US Companies
The Swan Defined Risk Fund seeks to address common investor concerns, such as seeking long-term capital appreciation and mitigating risks, via a hedged-equity approach to investment in the S&P 500.
The market is unpredictable, making it difficult to plan long-term outcomes. That’s why we believe reducing downside risk can help smooth out returns over market cycles and taking advantage of opportunities in times of extreme market weakness can significantly impact wealth creation over the long term.
With this in mind, we developed our Defined Risk Strategy in 1997 as a way to offer our clients a distinctive, innovative hedged equity approach that remains passively invested in equities to pursue long-term growth of capital while actively managing the hedge to capitalize on large moves in the equity market: raising the hedge level after large gains and unlocking the hedge value to buy more equity shares after large market declines.
Class A: SDRAX | Class C: SDRCX | Class I: SDRIX
Based on our Defined Risk Strategy, the Swan Defined Risk Fund is a goals-based, actively-managed hedged equity approach designed for investors seeking to achieve long-term growth of capital and risk-adjusted returns over a full market cycle with potentially less downside risk and volatility than the S&P 500 Index. See the disclosures below for more information.
The goal: is to achieve long-term growth of capital, while minimizing the downside risk of U.S. equity markets.
Key elements of our Always Invested, Always Hedged strategy include:
> Always invested using low-cost ETFs
> Designed to seek long-term growth of capital
> Always hedged using long-term put options
> Aims to dampen losses and potentially unlock the hedge value to gain more equity shares during major market downturns
PERFORMANCE
The performance data quoted represents past performance. Current performance may be lower or higher than the performance data quoted above. Past performance is no guarantee of future results. The investment return and principal value of an investment will fluctuate so that investors’ shares, when redeemed, may be worth more or less than their original cost. For performance information current to the most recent month-end, please call toll-free (877) 896-2590. Maximum sales charge for Class A Shares is 5.50%. Gross annual operating expenses are 1.52% for Class A, 2.27% for Class C, and 1.27% for Class I.
Randy Swan
Lead Portfolio Manager, Founder, President
Rob Swan
Portfolio Manager, Chief Operations Officer
Chris Hausman, CMT®
Portfolio Manager, Managing Director-Risk
Randy Swan started Swan Global Investments in 1997, looking to supply investment management services that were not available to most investors. Early in his financial career, Randy saw that options provided an opportunity to minimize investment risk.
Randy Swan and Rob Swan have been managing the Funds since inception.
CONTACT
Swan Capital Management
1099 Main Avenue – Unit 206
Durango, CO 81301
Tel: 970.382.8901
Ultimus Fund Solutions, LLC
Regular Mail
c/o Ultimus Fund Solutions, LLC
P.O. Box 541150
Omaha, Nebraska 6815
Express/Overnight Mail
c/o Ultimus Fund Solutions, LLC
4221 North 203rd Street, Suite 100
Elkhorn, Nebraska 68022
Direct Contacts
For investors with general questions:
Toll Free
P: 866-617-7926
For advisors or institutions with questions:
P: 970-382-8901, ext. 114
E: Email
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Investors should carefully consider the investment objective, risks, charges and expenses of the Swan Defined Risk Funds. Mutual funds involve risk, including possible loss of principal. There is no guarantee the Fund will meet its objective. This and other information is contained in the prospectus and should be read carefully before investing. For a prospectus please call Swan Defined Risk Funds at (877) 896-2590.
The Funds are distributed by Northern Lights Distributors, LLC, member FINRA / SIPC. Northern Lights Distributors, LLC is not affiliated with Swan Capital Management, LLC, Swan Global Management, LLC, or Swan Global Investments, LLC. Swan Capital Management, LLC, Swan Global Management, LLC, and Swan Global Investments, LLC are affiliated entities.
Important Risks:
Mutual funds involve risk, including loss of principal. There is no guarantee that any investment strategy will achieve its objectives, generate profits or avoid losses.
Investors cannot directly invest in an index and unmanaged index returns do not reflect any fees, expenses or sales charges. Swan may invest in index ETFs as an underlying asset within each mutual fund, such as:
The use of leverage, such as that embedded in options, could magnify the Fund’s gains or losses. Written option positions expose the Fund to potential losses many times the option premium received.
The adviser’s dependence on its Defined Risk Strategy process and judgments about the attractiveness, value and potential appreciation of particular ETFs and options in which the Fund invests or sells may prove to be incorrect and may not produce the desired results.
Purchased put options may expire worthless and may have imperfect correlation to the value of the Fund’s sector ETFs. Written call and put options may limit the Fund’s participation in equity market gains and may amplify losses in market declines. The Fund’s losses are potentially large in a written put or call transaction. If un-hedged, written calls expose the Fund to potentially unlimited losses.
Definitions:
SPY: The SPDR® S&P 500® ETF Trust seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500® Index.
Hedge: Hedging is a strategy to limit investment risks. Investors hedge an investment by trading in another that is likely to move in the opposite, or inverse, direction. A risk-reward tradeoff is inherent in hedging; while it reduces potential risk, it may chip away at potential gains. Hedging via put options may be effective because the put option’s inverse relationship with its underlying assets is clearly defined.
Options: An option is a contract that gives the buyer the right to either buy (in the case of a call option) or sell (in the case of a put option) an underlying asset at a pre-determined price by a specific date. Options are a powerful tool for creating a wide array of potential payoff profiles and may be used on a standalone basis or integrated into a broader portfolio strategy.
Put option: An option contract giving the owner the right, but not the obligation, to sell a specified amount of an erlying security at a specified price within a specified time.
LEAPS, or long-term equity anticipation securities, are publicly traded options contracts with expiration dates that are longer than one year, up to three years from the date of issue.
Volatility: The measurement of how varied the returns of a given security or market index are over time. It is often measured from either the standard deviation or the variance between those returns. In most cases, the higher the volatility, the riskier the security.
Standard Deviation is a measure of the dispersion of a set of data from its mean. The more spread apart from the benchmark, the higher the deviation.
Beta is a measure of the volatility, or dispersion, of a security or a portfolio in comparison to the market as a whole.