OVERVIEW & PROCESS

Investment Objective

The IRON Convertible Strategy’s objective is to maximize total return through the selection and management of a credit and sector diverse convertible bond portfolio.

Investment Philosophy and Process

We believe convertible bonds are a compelling asset class that can provide upside equity market participation, seek to mitigate losses during market downturns and enhance the yield over the equity market. This requires a portfolio to be structured with specific security characteristics to meet these objectives. This type of portfolio seeks to add value over full market cycles by minimizing portfolio drawdowns and increasing overall portfolio returns.

We use a proprietary, multi-factor model to narrow the investment universe to a select subset of securities. Based on our research, a portfolio created with these securities may provide downside mitigation of losses, lower volatility and higher expected returns than the Barclays US Convertibles Composite Index. Each convertible security in this select subset is further analyzed for its credit risk, call risk, duration and liquidity. If a specific and compelling risk is identified, the security will be eliminated from the select subset. All remaining securities are ranked based on a factor model composite score.

The resulting portfolio is both credit and sector diverse. Generally our process tends to create a portfolio of securities with high credit quality, low duration, attractive option premiums and an overall balanced risk-reward profile.

Risk Management

The portfolio is actively monitored using IRON’s Proprietary Risk Management practices. Credit quality, issuer rating, duration, and sector diversification are closely monitored and adjusted as needed on an ongoing basis. In addition, our disciplined investment approach incorporates a set of specific criteria for exiting underperforming securities that no longer fit the risk/reward profile that we seek.

PORTFOLIO PERFORMANCE

as of 9/30/2017

ANNUALIZED TOTAL RETURNS

as of 9/30/2017

Disclosures

Management fees of 0.70% annually, our highest published fee, have been deducted from the above results. The data for the IRON Convertible Strategy includes all discretionary portfolios in the composite. In order to be included in the composite, an account must have an initial starting balance of $250,000 or greater.   Net returns reflect deduction of management fees on a monthly basis. Actual accounts are charged quarterly in arrears based on the quarter end value adjusted for capital flows. Past performance is not indicative of future results and an investment in the IRON Convertible Strategy involves the risk of loss, particularly with respect to short-term performance.  Performance data assumes reinvestment of dividends and interest and includes transaction costs. If dividends and interest were not reinvested, then the above results would be considerably different.

Performance results for the above are unaudited. Investment results shown above are based upon the particular securities selected. Investment results are based upon a single account managed by the advisor. The charts, tables, performance and other information shown are provided to you for informational purposes only and are not intended to be an do not constitute investment or tax advice nor an opinion or recommendation regarding the appropriateness of any investment. The material contained in this document is for general information purposes and is not intended as an offer or a solicitation for the purchase and/or sale of any security or financial instrument, nor is it advice or a recommendation to enter into any transaction Future returns may differ significantly from the past due to materially different economic and market conditions. Investments within portfolios, and therefore, portfolios, involve risk and the possibility of loss, including a permanent loss of principal.

Actual performance of client portfolios may differ materially due to the timing related to the actual deployment and investment of a client portfolio, the reinvestment of dividends, length of time various positions are held, client objectives and restrictions, and fees and expenses incurred by the individual portfolio. Although the information in this report has been obtained from sources that the firm believes to be reliable, we do not guarantee its accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the firm’s judgment as of the date of this report and are subject to change without notice.

BarCap US Convertibles Index: The BarCap US Convertibles index (previously LEHMAN US Convertibles Index) is a rules-based composite index that includes all four major classes of convertible securities (i.e. cash-pay bonds, zero/OIDs, preferreds and mandatories).  It only includes non-called, non-defaulted US dollar denominated convertibles securities with a minimum of $50 million size outstanding and at least 31 days until maturity.

S&P 500 Total Return Index (SPXT): Standard and Poor’s 500 Total Return Index is a capitalization-weighted index of 500 stocks’ price return and reinvested dividends. The index is designed to measure performance of the broad domestic economy through changes in the aggregate market value of 500 stocks representing all major industries.

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RISK RETURN

as of 9/30/2017

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LITERATURE

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MANAGEMENT TEAM

 - AARON IZENSTARK

AARON IZENSTARK

CO-FOUNDER, CIO
MANAGING DIRECTOR

 - DR. RAMESH POOLA, PH.D., CFA

DR. RAMESH POOLA, PH.D., CFA

MANAGING DIRECTOR OF INVESTMENT AND QUANTITATIVE RESEARCH

 - TED CONNOLLY

TED CONNOLLY

DIRECTOR, PORTFOLIO MANAGEMENT AND TRADING

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