The primary objectives of the strategy are to generate capital gains, preserve capital and make monthly distributions by investing primarily in securities that can benefit from changes to interest rates and credit spreads. The strategy aims to maintain low volatility and low correlation with traditional equity and fixed income markets.
The strategy may use leverage through the use of cash borrowings, short sales and derivatives. The aggregate amount of cash borrowing and the market value of the securities sold short will not exceed 50% of the strategy’s net asset value, and the aggregate amount of cash borrowing, the market value of the securities sold short and the notional amount of derivatives used for non-hedging purposes will not exceed 300% of the strategy’s net asset value.
The strategy will seek to achieve its investment objectives by primarily investing in or selling short securities of issuers located primarily within North America. The strategy of the strategy will be driven by ongoing credit research and macro-economic analysis performed by the Manager. Strategy composition will vary depending on market conditions and various phases of the economic and credit cycle. The portfolio selection process begins by constructing a “top-down” based macroeconomic analysis considering economic, credit cycle, market, and sector conditions. Overall valuations, fundamentals and technicals assist in forming the framework. We then determine a portfolio risk-based allocation, factoring in credit quality, liquidity, yield, and capital appreciation potential. Our process then moves to a “bottom-up” security selection exercise, following a rigorous fundamental quantitative and qualitative individual security, company and scenario assessment and analysis. Investment selection focuses on a relative value approach, low turnover, higher quality and diversification.