Rational/RGN Hedged Equity Fund - Class A (RNEAX)

Overview

The fund described focuses on providing an investment option that aims for higher returns with reduced risk, compared to a direct investment in the S&P 500 Index. By strategically combining a long-only equity portfolio that mirrors the S&P 500's performance with an overlay component of derivatives and foreign currency investments, the fund seeks to achieve minimal tracking error against the index. This approach allows the fund to offer an alternative investment strategy that balances the potential for profit with a cautious risk profile. Notably, the fund operates with a non-diversified status, meaning it may focus its investments more narrowly than diversified funds.

Products and Services

The fund's strategy encompasses a blend of two main investment approaches designed to work in conjunction to provide both return enhancement and risk mitigation:

• Long-Only Equity Portfolio

  This component of the fund's strategy aims to closely track the performance of the S&P 500 Index by investing directly in equities. The goal is to replicate the index's return, thereby aligning the fund's performance with the broader market's movements. This traditional investment approach forms the core of the fund's assets, providing the foundation upon which the overall strategy is built.

• Overlay Component

  As a supplement to the long-only equity portfolio, the fund employs an overlay strategy that involves investments in derivatives (such as futures, forwards, and options contracts) and foreign currency transactions through Foreign Exchange (Forex). This multifaceted strategy is designed to reduce overall investment risk and enhance returns, differing from traditional long-only strategies by potentially profiting from market volatility and leveraging hedging techniques. Through this overlay, the fund seeks to provide investors with a smoother return profile and mitigate the impact of downward market movements on the portfolio.