DLTAS

The investment product “DLTAS” is an abbreviation of Diversifying Liquid Transparent Absolute return Strategies. The Product will diversify classic portfolios as DLTAS is low correlated to equities, bonds, and real assets. Moreover, DLTAS will also hedge against falling ordinary markets. It is liquid and can be fully liquidated within a day without significant slippage. It is fully transparent and all the holdings and exposures can be seen any time by the client. As the purpose of the product is to deliver positive returns irrespectable of general market conditions the product is an absolute-return product. It delivers high returns, low risk, and gives down-side protection. 

DLTAS can be perceived as a strategic down-side protecting risk management investment product with positive returns.

The product is cognitively more demanding than buying stocks/equity, bonds/credit or real assets/cash-flows. It is trading strategies driven by the value proposition of decreasing economic risks which induce higher economic growth rates globally. If you want to read about the background - click here

The product DLTAS offers the following attributes:

    • Diversification and hedging – The investment portfolio will diversify classical portfolios consisting of stocks, bonds, and real assets. The portfolio of trading strategies reduces risk by combining traders using diverse strategies. Moreover, there will also be hedging property against falling ordinary markets (stocks, bonds, and real assets). As a result of diversification and hedging properties the down-side risk of the investment portfolio is typically much less than the average risk of traders.
       
    • Liquidity – The investment portfolio is extremely liquid as it only is invested in extremely liquid markets in Futures, Options, and to a less degree FX. All traders included in the portfolio hold instruments which can be liquidated in one day (and often minutes) without significant slippage. As such, Return Advisors provide investors with daily liquidity.
       
    • Transparency and Safety – The investment portfolio is constructed using individually held managed accounts - a structure that provides full transparency and control of assets. 
       
    • Mitigation of Fraud Risk – The combination of control of assets and full transparency mitigates against the possibility of fraud or experiencing losses that are not visible to investors.
       
    • Low correlated to Traditional Markets - Historically, the strategies selected for the investment portfolios have generally exhibited negative-to-low correlation to equity, bond, and credit markets. Also, the focus on high liquidity traders implies that the investment portfolio should not be subject to the “correlations going to one” effect, which is inherently driven by liquidation pressure.
       
    • Low Correlation to other Alternative Investments – Portfolios constructed by Return Advisors have a low correlation to hedge funds, commodity indexes, and illiquid alternative investments . 
       
    • Qualitatively and Risk influenced Manager Selection - Traders are bottom-up selected on basis of investment edge, return to down-side risk ratio, and qualitative assessments. 
       
    • Risk-Based Allocation—Traders’ allocations are sized due to their risk levels, properties of investment strategies, and how they fit into to the portfolio as a whole.
       
    • Notionalization - The use of managed accounts with traders who trade futures and FX—strategies that have low margin-to-equity ratios—allows for notional funding. The resulting excess cash makes it possible to hold a larger allocation for the same level of assets under management vis-à-vis fund of fund investments in the same strategies. 
       
    • Enhanced Return Potential versus Fund Equivalent Investment - The combination of broad diversification, risk-based allocation, and notionalization provides the potential for enhanced return vis-à-vis equivalent fund-based investments, without increasing volatility. 
       
    • Client Customization – Portfolios can be designed to match client’s risk targets, diversification requirements, and many other specific constraints.
       
    • Daily NAV Reports and Monitoring - The full transparency available for all portfolio holdings allows for daily NAV and the portfolio is monitored daily.

 

  Background

The background for the product, in modern times, goes back to year 1848 in USA. Wealthy investors in USA were looking for investment opportunities. In the Midwest farmers were growing, mainly, corn and they were face with the risk that harvests could be bad. Prices and quantities of the crops were unsure. The wealthy investors and the farmers came up with the idea that sharing risk would be beneficial for both parties.

By trading crops at known future prices a lot of the risk could be taken out of the farmers’ production and profit. The investors would gain by being able to invest in crops and take part in the profit of the certainty-equivalence gain. The result and the real economic effect was that more crops were planted and more people could be fed in the Midwest. More people moved to the Midwest and economic growth flourished. Sharing risk is not a zero-sum game; rather it increases utility for the participants and the surrounding society.

Until the 1970ies it was commodities which were traded on Futures exchanges. In the 1970ies financial futures were also beginning to be traded. Today corporations, pension funds, sovereigns etc. are managing their risks by using futures and options markets. That is wealth creation globally.

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