Feedback from investment managers is immensely helpful for us in regards to our daily ETF coverage, and Friday’s piece about “Low Volatility Equity” resulted in a helpful exchange with Giralda Funds whom offer two open-ended mutual funds that are starting to hit radars.
GDAMX (The Giralda Fund, Expense Ratio 0.19%) launched in July of 2011 and has since attained a 4 star Morningstar rating and about $227 million in assets under management according to Morningstar data, while GRGIX (Giralda Risk-Managed Growth Fund, Expense Ratio ) is a newer launch (May of 2014) and subsequently smaller in asset size with about $18 million in AUM. GDAMX and GRGIX are once again, ’40 act open ended mutual funds but their investment methodologies are predicated on investing mostly in sector based U.S. listed ETFs that advisors and most retail investors are likely familiar with.
According to fund literature “The Giralda Funds are open-end mutual funds that seek to provide primarily U.S. large cap equity exposure with several layers of downside risk management. The manager’s goal is to limit asset depreciation during both protracted and catastrophic market downturns while allowing asset appreciation in up-trending markets.”
Furthermore, in a note about investment strategy in fund literature it is stated that “Risk-managed investing attempts to go beyond traditional diversification, asset allocation, and rebalancing – to explicitly reduce portfolio volatility and/or limit downside potential. The Giralda Funds embody two main risk-managed investment strategies: momentum-based sector rotation and tail risk hedging. Together, these are designed to seek protection against protracted down markets and catastrophic market crashes.”
There are a couple key terms in these statements that resonate with us simply because we spent a good portion of last week discussing the ever present popularity of two “Low Volatility Equity” specific ETFs, SPLV and USMV, as well as newer innovations in the Low Volatility or “Managed Volatility” space in terms of ETF offerings that have surfaced in recent months and years.
Volatility is a reality as we are reminded with the choppy trading action we witnessed throughout most of January as well as being a sometimes misunderstood and often miscalculated concept, and adjusting for volatility and managing portfolios accordingly can be surely be a daunting task at times. Interestingly, this firm’s offerings do not stop with the two ’40 Act mutual funds, but we also see Sector Dynamics SMA and UMA products that are now available to the RIA community from Giralda, predicated on the same sector equity oriented approach.