New York, NY – February 4, 2020 – Rational Funds, a family of funds rooted in the investment philosophy of applying a rational approach to investing, today announced the launch of the Rational Equity Armor Fund (HDCTX). HDCTX pairs investments in dividend paying U.S. equities with a distinct volatility hedge overlay that utilizes the same methodology as the Equity Armor Investments VOL 365 Index (the EAVOL Index). i
The Fund primarily invests in common stock of dividend paying companies included within the S&P 500 Index, with an objective to seek total return on investment, with dividend income an important component of that return. The management team employs a rules-based quantitative strategy to invest in common stock that they believe offers the best return potential and low volatility under the current economic environment. The proprietary model looks at specific factors such as domestic unemployment rate, corporate cash flow, housing starts, auto sales and new durable goods, in addition to monetary factors, interest rates, various index levels including gold index, energy prices, consumer price index and international factors such as euro exchange rates, FTSE 100, Tokyo stock exchange and agricultural exports.
In addition to common stock, HDCTX’s strategy includes a distinct volatility overlay strategy which seeks to maintain long correlation to volatility with the goal of offsetting equity market declines. It does so in a manner that avoids the price decay that often comes with traditional volatility-based strategies and reflects the methodology of the EAVOL Index. This portion of the Fund’s strategy will seek to achieve approximately two-thirds of the return of the EAVOL Index.
“We believe the Rational Equity Armor Fund offers a distinct opportunity to leverage a rules-based, macroeconomic strategy,” said David Miller, CIO of Rational Funds. “Combined with the volatility hedge overlay, this strategy gives investors the opportunity to invest in the rising stock market while seeking to limit risk exposure. With volatility on the uptick, this type of risk mitigation may prove critical for any downturn in equities.”
The Rational Equity Armor Fund trades under HDCTX, HDCAX, and HDCEX. For more information on Rational Funds and its mutual fund products, please visit: www.rationalmf.com.
About Rational Funds
Rational Funds is a family of funds rooted in the investment philosophy of applying a rational approach to investing. The firm currently offers nine mutual fund products, which employ rigorous research backed by sound academic theory and a disciplined and systematic investment approach. The funds strive to deliver superior risk-adjusted returns, at the apex of successful modern portfolio strategies for today’s investor. For more information on Rational Funds and its mutual fund products, please visit: www.rationalmf.com.
iEAVOL Index was created to accommodate those looking to have long volatility exposure over a long time and avoid the decay associated with such a transaction. The Index selects positions that present the least potential for time decay while maintaining the highest correlation to VIX Index price movement each day. The Fund’s volatility component seeks 2/3 of the return of the Index.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Rational Funds. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling (800) 253-0412 or at www.RationalMF.com. The prospectus should be read carefully before investing. The Rational Funds are distributed by Northern Lights Distributors, LLC member FINRA/SIPC. Rational Advisors, Inc. is not affiliated with Northern Lights Distributors, LLC.
Important Risk Consideration
Investing in the Fund carries certain risks. The value of the Fund may decrease in response to the activities and financial prospects of an individual security in the Fund’s portfolio. The performance of the Fund may be subject to substantial short-term changes. To the extent the Fund invests in the stocks of smaller-sized companies, the Fund may be subject to additional risks, including the risk that earnings and prospects of these companies are more volatile than larger companies. Smaller-sized companies may experience higher failure rates than larger companies and normally have lower trading volume than larger companies. These factors may affect the value of your investment. Investments in real estate investment trusts (REITS) involve special risks associated with an investment in real estate, such as limited liquidity and interest rate risks, and may be more volatile than other securities. There are no guarantees that dividend paying stocks will continue to pay dividends. In addition, dividend paying stocks may not experience the same capital appreciation potential as non-dividend. The performance of the Fund is based in part on the prices of one or more of the VIX Futures in which the Fund invests. Each of the equity securities held by the Fund and the VIX Futures are affected by a variety of factors and may change unpredictably, affecting the value of such equity securities and VIX Futures and, consequently, the value and the market price of the Fund’s shares.