Welcome to the Education & Research section of Days Global Advisors.
A discussion of hedge funds is relevant to understanding the DGA Absolute Return ETF. Our investment approach uses a traditional absolute return hedge fund strategy. Hedge funds operating absolute return strategies aim to generate positive returns regardless of market conditions over time. Hedge funds are known for their ability to generate uncorrelated and positive returns over both bull and bear markets.
Similarly, the DGA Absolute Return ETF aims to provide positive returns over time, regardless of whether the broader market is up or down, executing a hedgefund macro strategy to generate uncorrelated returns.
Because we utilize similar investment strategies as hedge funds, a discussion of hedge funds and absolute return can provide valuable insights into investment approach and performance.
If you're well-versed in hedge funds, absolute return, and the underlying mathematical principles, directly navigate to the "Fund Details" or "Institutional" page for more information.
Origin & Evolution of Hedge Funds
- The term “hedge” originates from the protective walls of bushes, symbolizing safeguarding and privacy.
- The classical definition of hedge funds in finance refers to active portfolio risk management. Initially, hedge funds aimed to mitigate investment risks by shorting the market, earning profits to offset declining asset values.
- It is important to understand the difference between the traditional definition of hedge funds and the modern, expanded definition that encompasses a range of privately pooled investment strategies, some of which do not actually hedge risks.
- This broader definition has resulted in some high-profile hedge fund failures that have tarnished the public’s perception of conservative classical hedge funds and their absolute return strategies.
Absolute Return Strategies
- Absolute return is an investment strategy that seeks to generate positive returns regardless of the broader market’s performance.
- The goal of absolute return strategies is to deliver consistent, risk-adjusted returns over time, with a focus on protecting capital and reducing downside risk.
- Hedge fund managers first developed and popularized the absolute return concept. Hedge funds used these strategies as a means of hedging risk.
- Institutional investors, affluent individuals, and family offices have embraced Absolute Return strategies, harnessing their potential to their advantage. These approaches serve as key tools in realizing long-term investment objectives.
- This wealth management strategy aims to generate long-term positive returns regardless of market conditions by actively investing in a diversified range of assets and employing proactive risk management techniques.
Hedge Funds vs. DGA Absolute Return ETF
- Private Offerings – Not available to unaccredited or unqualified purchasers.
- High Minimum Investment – This may range into millions depending on the fund.
- Low Liquidity – Investment may be illiquid with long lock-up periods.
- AUM Fees – Charge fees with an industry standard of 2% of AUM.
- Performance fees – Charge fees with an industry standard of 20% of profits.
- Lack of Transparency – Holdings are hidden from the public.
- Public Offering – Available to all investors through the NYSE stock exchange.
- No Minimum Investment – None. Encouraging everyone to participate in investing.
- High Liquidity – Investment is liquid for public transactions daily.
- AUM Fees – Lower fees than the standard 2% of AUM.
- Performance Fees – None. Keep your profits.
- Full Transparency – Fund holdings and values are available daily.
The Market Mathematics of DGA Absolute Return ETF
Days Global Advisors has selected Crestmont Research for its in-depth analysis and insights into researching absolute return.
The following provides an overview of the mathematical and market concepts that underpin the long-term wealth-building and preservation performance of the DGA Absolute Return ETF.
1. Reverse Compounding
- The chart on the right demonstrates the effects of reverse compounding, which highlights the asymmetry between market gains and losses.
- As an example, when a portfolio experiences a 50% loss in value, it requires a subsequent 100% gain to recover and return to the break-even point.
2. The Half & Half Portfolio
- The Half & Half Portfolio concept demonstrates that, over the long term, absolute return strategies have the potential to yield higher returns with reduced portfolio risk, without the necessity to outperform the market each year.
- The accompanying chart on the right highlights the value brought by a skilled hedge fund manager who is able to manage risk and capture just 50% of a market’s decline.
- By achieving this, the hedge fund manager can mathematically generate long-term returns equal to or surpassing the market while only needing to participate in 50% or more of a market’s upward movement.
3. Generational Wealth Building Using Absolute Return
- The chart on the right displays data from the past 50 years, demonstrating that the Half and Half Portfolio is not merely a theoretical concept.
- In fact, it represents the actual returns achievable by devoted classical hedge fund managers who rigorously execute absolute return strategies.
The market strategies, methods, and approaches employed by Days Global Advisors aim to produce portfolio returns with over 50% upside market capture while maintaining less than 50% downside market capture.
For a deeper dive into understanding absolute return strategies, we encourage you to read the full research paper and visit www.crestmontresearch.com for more insights.
Investors should consider the investment objectives, risks, charges, and expenses carefully before investing. For a prospectus or summary prospectus with this and other information about the Fund, please visit our website at www.daysadvisors.com. Read the prospectus or summary prospectus carefully before investing.
Investment Objective: The DGA Absolute Return ETF seeks long-term capital appreciation as a primary objective, with capital preservation as a secondary objective.
Investments involve risk. Principal loss is possible. New Fund Risk. The Fund is a recently organized management investment company with no operating history. As a result, prospective investors do not have a track record or history on which to base their investment decision. Shares May Trade at Prices Other Than NAV. As with all ETFs, Shares may be bought and sold in the secondary market at market prices. Although it is expected that the market price of Shares will approximate the Fund’s NAV, there may be times when the market price of Shares is more than the NAV intra-day (premium) or less than the NAV intra-day (discount) due to supply and demand of Shares or during periods of market volatility. Cybersecurity Risk. With the increased use of technologies such as the Internet to conduct business, the Fund is susceptible to operational, information security, and related risks. Equity Market Risk. The equity securities in which the Fund invests may experience sudden, unpredictable drops in value or long periods of decline in value. Political Criteria Risk. Because the Sub-Adviser evaluates the political activity of the companies in the Fund’s investment universe as part of its portfolio management process, it may forego some market opportunities available to other funds that do not consider political factors.
Tidal Financial Group (Tidal) serves as the Investment Adviser for the Fund.
Days Global Advisors (DGA) serves as the Sub-Adviser to the Fund.
The Fund is distributed by Foreside Fund Services, LLC. Foreside, Tidal, and DGA are not related.
*Access a strategy once reserved for private wealth management and institutional investors. This statement refers to the availability of a financial strategy that was previously only accessible to high net worth individuals and institutional investors. The strategy may now be available to a broader range of investors. Still, it is important to note that past performance is not indicative of future results, and any investment decisions should be made after careful consideration of one’s individual financial circumstances and objectives.
Underlying ETFs Risks. The Fund will incur higher and duplicative expenses because it invests in Underlying ETFs. There is also the risk that the Fund may suffer losses due to the investment practices of the Underlying ETFs. The Fund will be subject to substantially the same risks as those associated with the direct ownership of securities held by the Underlying ETFs. In addition, the Underlying ETFs held by the Fund may utilize leverage (i.e., borrowing) to acquire their underlying portfolio investments. The use of leverage may exaggerate changes in an Underlying ETF’s share price and the return on its investments. Accordingly, the value of the Fund’s investments in Underlying ETFs may be more volatile and all other risks, including the risk of loss of an investment, tend to be compounded or magnified.
Models and Data Risk. The composition of the Fund’s portfolio is heavily dependent on proprietary investment models as well as information and data supplied by third parties (“Models and Data”). When Models and Data prove to be incorrect or incomplete, any decisions made in reliance thereon may lead to the inclusion or exclusion of securities from the Fund’s portfolio that would have been excluded or included had the Models and Data been correct and complete.
Commodity ETF Risk. Commodity ETFs are generally not registered as investment companies for purposes of U.S. federal securities laws, and are not subject to regulation by the SEC as investment companies, although some commodity ETFs may be registered investment companies. Consequently, the owners of a non-investment company commodity ETF do not have the regulatory protections provided to investors in investment companies.
Fixed Income Securities Risk. The Fund may invest in Underlying ETFs that invest in fixed income securities. The prices of fixed income securities may be affected by changes in interest rates, the creditworthiness and financial strength of the issuer and other factors. The increase in prevailing interest rates typically causes the value of existing fixed income securities to fall and often has a greater impact in longer-duration and/or higher quality fixed income securities.
Foreign Securities Risk. Foreign securities held by Underlying ETFs in which the Fund invests involve certain risks not involved in domestic investments and may experience more rapid and extreme changes in value than investments in securities of U.S. companies.