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Litman Gregory Masters Funds launches high income alternatives fund


Litman Gregory Fund Advisors, an affiliate of wealth management firm Litman Gregory Asset Management, has launched Litman Gregory Masters High Income Alternatives Fund.

The fund will be available from 28 September on most trading platforms in two share classes: Investor (MAHNX, minimum USD1,000) and Institutional (MAHIX, minimum USD100,000).
The fund seeks to generate a high level of current income from diverse sources, consistent with the goal of capital preservation over time. Capital appreciation is a second objective. It is sub-advised by four managers that are focused on alternative sources of income relative to core fixed income.
Ares Management manages the alternative equity income sleeve, which invests in specialty income-generating publicly traded equity sectors, while Brown Brothers Harriman runs the credit value sleeve, investing in fixed income securities from a variety of sectors, with an emphasis on non-mainstream asset-backed securities.
Guggenheim Partners manages the fund’s multi-credit sleeve, investing in a wide range of fixed-income securities across multiple segments of the credit markets, and Neuberger Berman oversees the option income sleeve, which writes collateralised put options on US stock indices.
“Today’s bond market is presenting fixed income investors with twin challenges of low yields and high interest-rate risk,” says Jeremy DeGroot, Chief Investment Officer of Litman Gregory Asset Management. “But we believe there are still good opportunities to generate income and returns by investing with income-oriented managers who have expertise in less efficient and less traditional areas of the financial markets – areas that most investors may not otherwise own. We believe these investment strategies can improve the long-term performance of a traditional balanced or fixed-income portfolio. That’s why we created Litman Gregory Masters High Income Alternatives Fund.” 
The fund’s managers were selected based on Litman Gregory’s extensive due diligence expertise. DeGroot says:”The sub-advisors we’ve chosen for this fund are experienced, opportunistic investors who also seek to mitigate risk; they aren’t chasing yield. We expect the fund to be relatively insensitive to the direction of interest rates, with returns comparable to high-yield bonds over time, but with less volatility and downside risk.”

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