Rational Funds Launches Rational Funds Income Opportunities Fund (RTFIX)
Fund Employs a Commercial Mortgage Backed Securities (CMBS) Strategy
Huntington, NY – June 11, 2018 – 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 Funds Income Opportunities Fund (RTFIX). The Fund offers a Commercial Mortgage Backed Securities (CMBS) strategy, and will be sub-advised by Cicero Capital Partners, which has managed a similar strategy in hedge fund form since September 2011.
RTFIX offers an alternative, tactically managed, fixed income strategy focused on mitigating risk while generating stable monthly cash flow. To achieve this, the Fund invests primarily in commercial mortgage backed securities (CMBS) and other commercial real estate structured securities such as REITs. Specifically, the strategy takes positions in duration legacy CMBS credit bonds, short duration CMBS that generate yields from fixed monthly coupon payments, and new issue CMBS when the market is suffering from dislocation and illiquidity. With these investments, the strategy seeks to offer the ability to outperform both equity and fixed income markets through price appreciation and trade generated gains.
“We are consistently looking to identify proven, rationally-driven investment strategies to add to the Rational Funds family,” said Jerry Szilagyi, CEO of Rational Funds. “The Rational Funds Income Opportunities Fund is not only reminiscent of a strategy that has performed well over the last six years, it also offers investors a CMBS-based strategy that seeks to generate a stable cash flow uncorrelated to the equity or fixed income markets. As such, RTFIX’s alternative strategy may be a perfect complement to an investor’s income-generating portfolio.”
Fundamental to this strategy is RTFIX’s comprehensive due diligence process on the underlying collateral of each investment, including, but not limited to: analysis of property cash flows, competitive sub-market, potential lease rollovers, capital expenditures budgets and bond cash flows. The portfolio management team identifies entry points for investing, including distressed selling situations and/or distressed sellers and periods of market illiquidity caused by new regulations that creates opportunity to purchase bonds below market value.
The Rational Income Opportunities Fund trades under the tickers RTFIX, RTFAX and RTFCX. 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. Rational Funds 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.
About Cicero Capital Partners, LLC
Cicero Capital Partners is an SEC registered investment adviser that adheres to a disciplined capital allocation strategy that seeks to generate stable income and long-term growth potential. Cicero’s strategies are focused mainly on commercial real estate backed mortgage securities (CMBS). Cicero’s partners have a combined 38 years of investing experience in CMBS, REITs and commercial real estate related investments.
Important Risk Disclosures
Investing in the Fund carries certain risks. Investing in CMBS entails various risks: liquidity risks, interest rate risks, market risks, structural risks, geographical concentration risks; and in the case of non-agency CMBS, credit risk. Most CMBS are subject to risks associated with their structure and execution, including the process by which principal and interest payments are allocated and distributed to investors, how credit losses affect the issuing vehicle and the returns to investors in such CMBS.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 Fund’s investments in an underlying portfolio of exchange traded funds (“ETFs”), mutual funds and closed-end funds involve certain additional expenses and certain tax results, which would not be present in a direct investment in the underlying funds. The Fund may purchase and sell options on the same types of futures in which it may invest. Options on futures are similar to options on underlying instruments except that options on futures give the purchaser the right, in return for the premium paid, to assume a position in a futures contract (a long position if the option is a call and a short position if the option is a put), rather than to purchase or sell the futures contract, at a specified exercise price at any time during the period of the option. The Funds may invest in securities of real estate investment trusts (“REITs”). REITs are publicly traded corporations or trusts that specialize in acquiring, holding and managing residential, commercial or industrial real estate. Investments in the real estate industry involve particular risks. The real estate industry has been subject to substantial fluctuations and declines on a local, regional and national basis in the past and may continue to be in the future. Some securities held by the Fund may be difficult to sell, or illiquid, particularly during times of market turmoil. Illiquid securities may also be difficult to value. If the Fund is forced to sell an illiquid asset to meet redemption requests or other cash needs, the Fund may be forced to sell at a loss. Using derivatives or borrowing money to purchase securities can create leverage, which can amplify the effects of market volatility on the Fund’s share price and make the Fund’s returns more volatile. The use of leverage may cause the Fund to liquidate portfolio positions when it would not be advantageous to do so in order to satisfy its obligations. Hedging is a strategy in which the Fund uses a derivative or other type of security to offset the risks associated with other Fund holdings. There can be no assurance that the Fund’s hedging strategy will reduce risk or that hedging transactions will be either available or cost effective.
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. and Cicero Capital Partners are not affiliated with Northern Lights Distributors, LLC.