“People who think alternatives aren’t working and not helping them are wrong,” says Sunrise CEO Jason Gerlach. “They’re fundamentally misunderstanding the value of having portfolio diversification. If everything is rocketing up at the same pace and time, the portfolios aren’t diversified.”
Gerlach says he expects MULT’s strategy to deliver good enough performance in bull markets to keep investors satisfied, while acting as a shock absorber in rough times.
All-Weather Vehicle
Sunrise was founded nearly 35 years ago, but the roots of its investment strategies go back further with Rick Slaughter, the firm’s chief research officer and co-portfolio manager of MULT. Slaughter launched his first systematic trading fund, Commodity Monitors, Inc. (CMI), after studying finance at San Diego State University in the 1970s.
In the early 1980s, he met two local radiologists from the University of California-San Diego who, like him, were investing using statistical investment models.
The radiologists would each launch their own funds, including one in 1980 known as Sunrise Commodities Inc. After running CMI in parallel to Sunrise and the fund of his other radiologist peer for the next decade, Slaughter joined forces with them in 1995. Upon the merger, the three pooled their flagship funds and intellectual property. From that point, they worked together to continuously improve a single flagship investment program into its current multi-model, multi-strategy approach.
The new AdvisorShares Sunrise Global Multi-Strategy ETF combines elements of Sunrise’s two existing products––a hedge fund called Sunrise Evolution derived from the efforts of Slaughter and the two radiologists, which follows a more super-charged multi-model, multi-strategy quantitative investment approach that includes 80 different markets (some of its investments don’t conform with ’40 Act mandates for open-end funds); and its U.S. Equity Optimized Growth program, a separately managed account available to all investors
According to Sunrise, $1,000 invested in Sunrise Evolution in 1980 would’ve been worth $612,999 as of January 1, 2013. That trounced equities, fixed income, real estate and the managed futures alternative investment strategy by a country mile.
The U.S. Equity Optimized Growth program uses a set of proprietary quantitative models to systematically allocate to any combination of the nine primary sectors of the S&P 500. That strategy can range from 100 percent to 0 percent in equities.
The program’s track record is considerably shorter than the hedge fund (it began in January 2012), but it did return more than 27 percent in last year’s bull market. Its stated goal is to participate in rising stock markets while placing an emphasis on preserving capital during severe and extended market declines.