PRINCETON, N.J., Oct. 2, 2013 (GLOBE NEWSWIRE) -- Equinox Financial Group, LLC ("Equinox"), a leading provider of alternative investment offerings, is pleased to announce the launch of the Equinox EquityHedge U.S. Strategy Fund ("EquityHedge" or the "Fund") (Nasdaq:EEHAX). A dynamically-hedged, actively managed equity mutual fund, EquityHedge offers investors a potentially effective way to mitigate risk while seeking to capture excess returns across equity market cycles.
"Even during sustained bull markets, it's human nature for investors to worry about when the winds will shift. They second-guess their investment strategy and potentially miss the benefits of staying fully invested," said Robert Enck, President and CEO of Equinox. "In our view, the discipline to stay fully invested in an equity portfolio requires a hedge that is dynamic – one that works best when markets are falling and creates little or no headwind when markets are booming," added Afroz Qadeer, Chief Investment Officer of Equinox Institutional Asset Management, LP. Mr. Qadeer continued to explain, "EquityHedge seeks excess returns through the fundamental stock-picking abilities of a diversified group of equity managers, while employing a dynamic hedging strategy to potentially enhance returns and dampen risk during periods of market stress. The goal of the Fund is to capture equity bull market returns while seeking to minimize the impact of extended equity market downturns."
On the long side, EquityHedge employs a "manager of managers" approach, selecting multiple sub-advisors to provide diversified exposure to the U.S. equity market across styles, market capitalizations, sectors and industries. The portfolio currently comprises six sub-advisors that have been carefully selected in an effort to provide complementary portfolio effects. Historically, these managers have also shown the ability to earn "alpha" through their stock-picking abilities.
The dynamic hedging strategy was developed by Quest Partners, LLC ("Quest"), a commodity trading advisor registered with the U.S. Commodity Futures Trading Commission. The Quest Hedging Program seeks to take advantage of price momentum in markets that are negatively correlated with equities and attempts to capture profits during sustained bear markets. Conversely, the hedge is reduced during sustained bull markets with the goal of fully capturing upside equity performance. According to the Fund's portfolio manager, Sue Osborne, Director of Research of Equinox Institutional Asset Management, "Traditional long-short managers may be unable to fully utilize their stock selection skills on the short side due to the high cost of shorting individual stocks and various regulatory constraints specific to mutual funds. Limits on the extent of overall short exposure combined with daily liquidity requirements may prevent managers from taking advantage of all the tools at their disposal to hedge broad market risk. The 'Hedge' in EquityHedge does not share these constraints by design, allowing for a potentially more effective way to mitigate equity beta risk. In addition, the portfolio comprises what we believe are seasoned portfolio managers offering a diverse blend of 'alpha' seeking strategies."
The Equinox family of companies has been an innovator in alternative investment product development and distribution since its founding in 2003. In December 2009, Equinox Fund Management launched the MutualHedge Frontier Legends Fund ("MutualHedge") (Nasdaq:MHFAX), the first actively managed mutual fund with exposure to Commodity Trading Advisor programs. Equinox Fund Management also sponsors the Equinox Alternative Strategy Platform, a menu of single commodity trading advisor programs offered in a mutual fund format and The Frontier Fund, a public managed futures family of funds with daily liquidity.
Alpha is a measure of performance on a risk-adjusted basis. Alpha takes the volatility (price risk) of a fund and compares its risk-adjusted performance to a benchmark index. The excess return of the fund relative to the return of the benchmark index is a fund's alpha.
A Hedge involves making an investment to reduce the risk of adverse price movements in an asset. Normally, a hedge consists of taking an offsetting position in a related security, such as a futures contract.
Long-short managers utilize both long and short investment strategies. A long position refers to the buying of a security such as a stock, commodity or currency, with the expectation that the asset will rise in value. A short position is a position whereby an investor sells borrowed securities in anticipation of a price decline and is required to return an equal number of shares at some point in the future.
Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the market as a whole. A beta of 1 indicates that the security's price will move with the market. A beta of less than 1 means that the security will be less volatile than the market. A beta of greater than 1 indicates that the security's price will be more volatile than the market. For example, if a stock's beta is 1.2, it's theoretically 20% more volatile than the market.
Equinox engages one or more sub-advisors to make investment decisions for a portion of the Fund. Equinox's asset allocation decisions among various sub-advisors and investment strategies may not anticipate market trends successfully. There is a risk that Equinox may be unable to identify and retain sub-advisors who achieve superior investment returns relative to other similar sub-advisors.
Because each sub-advisor makes investment decisions independently, it is possible that the security selection process of the sub-advisors may not complement one another. As a result, the Fund's exposure to a given security, industry sector or market capitalization could be smaller or larger than would be the case if the Fund was managed by a single sub-advisor. It is possible that one or more of the sub-advisors may, at any time, take positions that may be opposite of positions taken by other sub-advisors. In such cases, the Fund will incur brokerage and other transaction costs, without accomplishing any net investment results.
Equinox's judgments about the attractiveness, value and potential positive or negative performance of any sub-advisor, the Quest Hedging Program (or any other similar hedging strategy) or any particular security or derivative in which the Fund invests may prove to be inaccurate and may not produce the desired results. The profitability of the Fund's investment (typically through a swap agreement) in the Quest Hedging Program depends primarily on the ability of Quest Partners, LLP to anticipate price movements in the relevant markets and underlying derivative instruments and futures contracts. Such price movements are influenced by many factors. The Quest Hedging Program may not take all of the relevant factors into account. In addition, the Fund will indirectly bear the expenses, including management fees, and transaction fees, associated with the Quest Hedging Program through reduced returns.
Because the Fund will normally invest a substantial portion of its assets in common stocks, the value of the Fund's portfolio will be affected by changes in the stock markets. At times, the stock markets can be volatile, and stock prices can change drastically. Market risk will affect the Fund's net asset value, which will fluctuate as the values of the Fund's portfolio securities and other assets change.
Common and preferred stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. Warrants and rights may expire worthless if the price of a common stock is below the conversion price of the warrant or right. Convertible bonds may decline in value if the price of a common stock falls below the conversion price. Investor perceptions are based on various and unpredictable factors, including expectations regarding government, economic, monetary and fiscal policies; inflation and interest rates; economic expansion or contraction and global or regional political, economic and banking crises.
The Fund may invest a portion of its assets in the stocks of companies having smaller market capitalizations, including mid-cap and small-cap stocks. The stocks of these companies often have less liquidity than the stocks of larger companies and these companies frequently have less management depth, narrower market penetrations, less diverse product lines, and fewer resources than larger companies. Due to these and other factors, stocks of smaller companies may be more susceptible to market downturns and other events, and their prices may be more volatile than the stocks of larger companies.
The Fund either directly, or through the trading strategies employed by a sub-advisor or a hedging program such as the Quest Hedging Program will take short positions on certain derivative instruments and may sell certain securities short. If the price of the security or derivative has increased during this time, then the Fund will incur a loss equal to the increase in price from the time that the short sale was entered into plus any premiums and interest paid to the third party. In contrast to the Fund's long positions, for which the risk of loss is typically limited to the amount invested, the potential loss on the Fund's short positions is unlimited.
The use of swap agreements and other derivatives may expose the Fund to additional risks that it would not be subject to if it invested directly in the securities, commodities or currencies underlying those derivatives. Derivatives have economic leverage inherent in their terms that will magnify losses. There may be an imperfect correlation between the changes in market value of derivatives and the underlying asset upon which they are based. Purchased options may expire worthless. Derivative counterparties may default. There may not always be a liquid secondary market for derivative contracts.
The recent instability in financial markets has led the government to take a number of unprecedented actions designed to support certain financial institutions and segments of the financial markets that are exposed to extreme volatility and in some cases lack of liquidity. There can be no assurance that future regulatory actions authorized by the Dodd-Frank Act will not adversely impact the Fund. Major changes resulting from the Dodd-Frank Act or other legislative or regulatory actions could materially affect the profitability of the Fund or the value of investments made by the Fund or force the Fund to revise its investment strategy or divest certain of its investments.
The cost of investing in the Fund may be higher than the cost of other mutual funds that invest directly in futures, forwards or other derivative instruments. In addition to the Fund's direct fees and expenses, you will indirectly bear fees and expenses paid by any hedging program in which the Fund invests (such as the Quest Hedging Program), including brokerage commissions and operating expenses. Further, any investment in a hedging program will be subject to management fees and, potentially, performance-based fees, which are typically based on the leveraged account size or the "notional exposure" of the Fund to the hedging program and not the actual cash invested.
The use of leverage by the Fund (or hedging program in which the Fund may invest such as the Quest Hedging Program) will cause the value of the Fund's shares to be more volatile than if the Fund did not employ leverage. There is a risk that issuers and counter parties will not make payments on securities and other investments held by the Fund, resulting in losses to the Fund. Adverse changes in currency exchange rates may erode or reverse any potential gains from the Fund's investments. In general, the price of a fixed income security falls when interest rates rise.
Investments in foreign securities could subject the Fund to greater risks including, currency fluctuation, economic conditions, and different governmental and accounting standards. In addition to the risks generally associated with investing in securities of foreign companies, countries with emerging markets also may have relatively unstable governments, social and legal systems that do not protect shareholders, economies based on only a few industries, and securities markets that trade a small number of issues.
Non-diversification risk, as the Funds are more vulnerable to events affecting a single issuer. A higher Fund turnover will result in higher transactional and brokerage costs. Certain of the derivative instruments, including swap agreements, in which the Fund may invest may be traded (and privately negotiated) in the "over-the-counter" or "OTC" market. While the OTC derivatives market is the primary trading venue for many derivatives, it is largely unregulated.
Investors should carefully consider the investment objectives, risks, charges and expenses of the Equinox EquityHedge U.S. Strategy Fund, MutualHedge Frontier Legends Fund, Equinox Alternative Strategy Platform, and The Frontier Fund. This and other important information about the funds are contained in the applicable Prospectuses, which can be obtained by calling 1-866-276-6010 for The Frontier Fund or 1-888-643-3431 for Equinox EquityHedge U.S. Strategy Fund, MutualHedge Frontier Legends Fund and Equinox Alternative Strategy Platform. The Prospectuses should be read carefully before investing.
The Frontier Fund is distributed by Equinox Group Distributors, LLC, member FINRA. Equinox EquityHedge U.S. Strategy Fund, MutualHedge Frontier Legends Fund and Equinox Alternative Strategy Platform are distributed by Northern Lights Distributors, LLC, Member FINRA. Equinox Financial Group, LLC, Equinox Institutional Asset Management, LP, Equinox Group Distributors, LLC and Quest Partners, LLC are not affiliated with Northern Lights Distributors, LLC.
Securities offered through Equinox Group Distributors, LLC, Member FINRA. 47 Hulfish Street, Suite 510, Princeton, NJ 08542 1-877-837-0600