|Opportunity||Trading Program | Equity Index Program|
Client accounts are managed according to our proprietary U.S. Equity Index trading program. The program uses statistical analysis of a select group of broad-based equity indices to determine the bias, directional or stationary, of those equity indices. The identified bias can be an upward trend, a downward trend, a stationary trend, or no discernable bias. Additional analysis is then conducted to determine the strength of the bias and the level of confidence in the bias prediction. Finally, macroeconomic factors and market sentiment are considered, and positions are initiated via the trading of equity index futures or futures options.
Once we determine a tradable bias for a particular equity index, we then use futures and/or futures options to structure a trade intended to maximize the returns for the level of risk we deems acceptable.
In executing the program, the we may buy or sell futures on the equity indices. We may also initiate and adjust positions by buying or selling options on the futures. Options on futures that may be traded can be either call options or put options. In addition, the manager may sell uncovered put or call options to effect the strategy. During periods of large, single directional moves in the markets, uncovered option selling may result in substantial losses for the Client. Trading futures and futures options involves the use of significant margin, with the attendant risks.
|Key Features & Benefits|
Separately Managed Accounts (SMA's)
- Advisor access to client's SMA limited to trading privileges pursuant to program
- Only the client has authorization to move money in and out of account.
- Clients who open an account with online brokers, such as Interactive Brokers, receive daily statements detailing all account trading activity and direct online internet access to their accounts.
- Client accounts are "marked to market" daily. Closing account value is updated daily.
- Gains and losses from trading activity are treated under Section 1256 of the IRC which allows for 60% long term and 40% short term capital gain or loss.
- Clients can remove funds at any time. However, to minimize trading disruption and associated potential losses, Advisor highly recommends a 45 day notice to allow for adequate time to liquidate positions
- Unlike many hedge funds or managed accounts which require account minimums of $1 million or more, we accept accounts starting at $500,000 tailored to your circumstances
|Fees & High-water Marks|
- 2% annualized fee based on net liquidation value of the client's account accrues monthly and is paid quarterly to QuantScape.
- Example: On January 1, account value is $1,000,000. By January 31, account value has increased
to $1,100,000. Management fee for January is
$1,100,000 x 2% / 12 = $1,833.33
- 20% of net new profits are paid quarterly to QuantScape,. No incentive fees are charge until all existing losses, if any, are recouped. This recouping of losses before incentive fees are paid serves as a high water mark.
- Example with Incentive Fee: If the net asset value for the account at the end of January was $1,100,000, the net new profits for the month would be $100,000 and the incentive fee accrual for the quarter to to the end of January would be $20,000.
$100,000 x 20% = $20,000.00
- Example with loss resulting in no Incentive Fee: If the net asset value of the account at March 31 is $1,000,000, which means there was a loss of $100,000 between month end January and March 31, no incentive fees would have accrued, since net new profits would be zero.
$0 x 20% = $20,000.00
High-water mark in the form of Net New Profit
- Incentive fees are paid only in the case of net new profits. If no net new profits are generated, no incentive fee is charged. Prior losses from past months are carried forward and charged against net profits. Only when prior losses are made whole and net new profits are created by the quarter end are incentive fees charged.
- Example Net New Profits: Account has no prior losses going into a quarter. During the quarter, trading results in $20,000 of profit, commission for the trading comes to $680, $1,020 of management fees were deducted, and there was no other charges against the account. The net new profit for the quarter would be $18,300.
$20,000 - $680 - $1,020 = $18,300.00
- Example Net New Profits with Prior Loss: Account has prior losses of $5,000 going into a quarter. During the quarter, trading results in $20,000 of profit, commission for the trading comes to $680, $1,020 of management fees were deducted, and there was no other charges against the account. The net new profit for the quarter would be $13,300.
$20,000 -$5,000 - $680 - $1,020 = $13,300.00
|How To Invest|
|We are currently not accepting new accounts for this program.|
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