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Dynamically Hedged High-Yield Dividend Fund

Discover why investing into a dividend fund makes sense to both you and your investment portfolio.

Issued by: A North Investments Fund I LP

Managed by: A North Investments Management LLC

Distributed by: A North Investments INC

The ANI Hedged Dividend Fund ® is for investors seeking steady and predictable returns, while hedging against and profiting from adverse market-moving events. The fund took on substantially less risk when compared to the S&P 500 index. This was due to the fund’s proprietary hedging strategy (called black-swan insurance) which reduced the volatility of returns and eliminated large drawdowns during stock market crashes.

According to the fund’s historical performance from 2004 to 2014 the fund achieved a higher annual return when compared to the S&P 500. During that time frame the fund realized an annualized return of 11.34% while the S&P 500 realized only an annualized return of 5.20%.

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Achieving a higher rate of return compared to many popular benchmark indexes in the U.S. is just the tip of the iceberg for the fund’s it creates. Although it is important to recognize that having high rates of return is useless if there isn’t a well structured risk management strategy in place. In addition to the fund beating benchmark indexes on a consistent basis it is the fund’s unique risk management system that offers investors protection from negative market moving events, like a flash crash or major indexes experiencing a significant decline in a rather short amount of time.



FIRST, it’s to cap the amount of losses the fund experiences by establishing a maximum risk cap of 10%. The primary objective of the fund’s risk management strategy is to assure investors that their investment will never lose more than 10% at any given time. Establishing maximum risk assumption targets is one of the fixed measurements the fund utilizes in order to further develop our adaptive risk management system’s architecture. The fund relies heavily on the risk management tools it has at its disposal. A North Investments Fund I LP, A North Investments Management LLC, and A North Investments INC all have a strong economic-incentive to continuously innovate the tools it uses to manage their operations.

Historically, the ANI Hedged Dividend Fund ®  has done an excellent job at accomplishing its primary objective of capping the amount of losses to a maximum of 10%. Looking back at the fund’s historical investment performance from 2004 to 2014 the fund achieved a maximum drawdown of -9.75% and the S&P 500 experienced a maximum drawdown of -57.00%. We structured this fund to meet specific goals and to satisfy certain investors expectations. As you can see with our historical investment performance we abided by our promise to investors and have successfully delivered upon our promises year-over-year. We haven’t had one instance where the fund had maximum drawdowns of a magnitude greater than 10%, but that doesn’t mean our fund managers, analysts, traders, or anyone else affiliated with or involved with the fund has become complacent with the performance and accomplishments thus far.

The entire organization at A North Investments understands that the markets are becoming more advanced as each second passes and that the methods of asset allocation and risk management that characterize the financial asset markets today will eventually experience a paradigm shift thus requiring market participants to change the methods they rely upon to accomplish their objectives. 

“…the fund’s risk management strategy is to assure investors that their investment will never lose more than 10% at any given time.”

MAXIMUM DRAWDOWN: A risk metric indicating capital preservation, the maximum drawdown measures the peak-to-trough loss of an investment. It’s a metric that offers investors a worst case scenario. It tells investors how much money would have been lost if an investor bought at the absolute peak value of an investment, rode it all the way down, and then sold at rock-bottom.

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SECOND, it’s to take advantage of the growing volatility that the U.S. markets have been experiencing over the years. Volatility increases in the market and in individual stocks is expected to increase over the next few years and we believe that this occurrence in volatility is one that investors will need to get accustomed to or else their portfolios will get wiped out in a flash. When the market experiences an adverse market moving event that brings the market significantly lower than where it was previously it is at that point where the opportunity for additional profits takes place. The fund’s risk management system is composed of a few complex algorithms that assists fund managers in finding theoretically undervalued derivative instruments and at that point when an undervalued derivative hedge is discovered according to our proprietary theoretical pricing model we will acquire that derivative hedge (black-swan insurance) because it is priced at a discount compared to it’s alternatives. Now, when the market experiences a significantly lower day for example the black-swan insurance will more than offset the losses in the fund’s portfolio and if we acquired the black-swan insurance at a steep discount then the fund will be net positive because of the gains the black-swan insurance will accumulate.