ABOUT

coun•ter•point

/’koun(t)er, point/

NOUN

The use of contrast or interplay of elements in a work of art.

An investment portfolio requires careful integration of contrasting and interacting elements to meet its objective. Active management in the form of diversification at the asset class level and subsequent use of tactical strategies over time is an expression of counterpoint.

Trends in asset prices are by definition not instantly factored into markets. The use of quantitative active management strategies that detect these trends provides investors with an opportunity to avoid exposure to the worst of downturns and to seek profit from economic recoveries.

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Innovative

Active management uses security selection in an effort to outperform a benchmark and manage non-systemic portfolio risks. In practice, active management often means returns closely mimic a passive index, with some amount of tracking error. Counterpoint is not a “closet indexer” and instead targets absolute return, realizing that its investors’ need to pursue a financially secure future, not merely track a benchmark.

Tactical

Counterpoint’s approach to investing is characterized by strategies that seek to hold cash or safe haven assets in times of market volatility and likewise to seek to take on risk in more stable times. The traditional “buy and hold” passive approach is indiscriminate in allocation across market environments.

Conservative

Counterpoint seeks to avoid exposure to volatility that can create investor anxiety and tax account balances. This effort is central to our investment process. Counterpoint’s quantitative approach is based on conclusions derived from our empirical study of market history. According to our research, price levels have  been an effective predictor of volatility across most risky asset classes. Historical analysis suggests that when our price-driven models signaled to reduce risk, the following month’s realized volatility in the avoided risky asset class was on average above 95% higher versus when the models signaled to remain invested in those riskier asset classes. Our goal is to effectively manage risk amid such increases in volatility.

DISCLOSURES

Mutual Funds involve risk including the possible loss of principal.  The Fund is a new mutual fund as has a limited history of operations for investors to evaluate.  The Fund’s investments in secured and unsecured participations in bank loans and assignments of such loans may create substantial risk. The use of leverage by the Fund or an Underlying Fund, such as borrowing money to purchase securities or the use of derivatives, will indirectly cause the Fund to incur additional expenses and magnify the Fund’s gains or losses. Derivative instruments involve risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments. 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.

In general, the price of a fixed income security falls when interest rates rise. The Fund may invest in high yield securities, also known as “junk bonds.” High yield securities provide greater income and opportunity for gain, but entail greater risk of loss of principal. When the Fund invests in other investment companies, including ETFs, it will bear additional expenses based on it’s pro rata share of the other investment company’s or ETF’s operating expenses, including the potential duplication of management fees. The risk of owning an investment company generally reflects the risks of owning the underlying investments the investment company holds. The Fund will use model-based strategies that, while historically effective, may not be successful on an ongoing basis or could contain unknown errors. In addition, the data used in models may be inaccurate.

Investors should carefully consider the investment objectives, risks, charges and expenses of the funds managed by Counterpoint Mutual Funds. This and other important information about the funds is available in their prospectuses, which can be obtained at counterpointmutualfunds.com or by calling 844-273-8637. The prospectuses should be read carefully before investing. The Counterpoint Mutual Funds fund family is distributed by Northern Lights Distributors, LLC member FINRA/SIPC.

4067-NLD-1/27/2015

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