Investment Strategy

The EAS Genesis Fund allocates among three general asset classes: Alternatives, US Equity and Global Equity.

The characteristics of each investment category are as follows:

Investment Strategies

Each class invests in a combination of mutual funds and Exchange-Traded Funds (ETFs) across different investment styles and sectors. As such, there will be three different investment disciplines pursued within the Fund; specifically:

1) ALTERNATIVES

The Alternatives class is an absolute return discipline. To pursue this objective, we buy individual mutual funds and ETFs which employ an array of strategies, each of which is expected to move somewhat independently of the broad stock and bond markets. Some of these funds will use short-selling techniques. The chart below shows the principal styles used in the Alternatives component of the Fund. The Fund's position weightings to each style will vary over time. Click on any box to see a description of that Alternatives style.


Equity Market Neutral Long/Short Equity Hedged Equity
Dedicated Short Bond Hedge High Yield Bond
Distressed Debt Convertible Arbitrage Merger Arbitrage
Global Macro REITs Commodities

Sources: Hedgeworld and Emerald Asset Advisors, LLC

Why Alternatives investing?

2) US EQUITY

US Equity is an equity class that pursues long-term growth of capital. More specifically, to pursue this objective we prefer to use funds that employ a concentrated equity discipline; that is, long-only equity managers who confine their portfolios to a limited number of holdings (typically 30 stocks or less). Managers used in the US Equity component use a variety of styles, including (but not limited to):

  • Contrarian value
  • GARP
  • High ROE growth
  • Multi-Cap Investing
  • ROI

The US Equity class invests in a combination of mutual funds that each employ a concentrated equity style. We may also include short-index securities (dedicated short mutual funds or short ETFs) in this class to reduce portfolio volatility in times of perceived high market risk. The US Equity class generally yields a long-biased portfolio.

Why concentrated equity investing?

3) GLOBAL EQUITY

Our Global Equity approach is an equity-oriented style that takes a very long-term view of the global economy and financial markets. The Global Equity class is the Fund's most aggressive discipline and seeks to capitalize on long-term themes identified by Emerald's research team. Examples of such themes may include India equity, China equity, alternative energy, potable water and global REITs. The themes are captured primarily through ETFs and Mutual Funds. We may also include short-index securities (mutual funds or short ETFs) in this class to reduce portfolio volatility in times of perceived high market risk.

Why Global Equity investing?

IS IT A HEDGE OR A SHORT-BULL MARKET?

The EAS Genesis Fund may often use funds that short stocks and/or bonds. The short positions are used for one of two purposes:

1. To reduce overall portfolio volatility (i.e. to "hedge" the overall portfolio)
2. To seek profit from an anticipated decline in a market segment

An investor should consider the Funds’ investment objectives, risks, charges and expenses carefully before investing. This and other information about the EAS Genesis Fund and the EAS Global Cycle Fund is contained in the Funds’ prospectus, which can be obtained by calling 1-877-EAS-0757 (1-877-327-0757). Please read the prospectus carefully before investing. The Funds are distributed by Northern Lights Distributors, LLC, member FINRA. 0410-NLD-2/25/2011

The Fund engages in hedging activities by investing in inverse ETFs. Inverse ETF’s may employ leverage, which magnifies the changes in the underlying stock index upon which they are based. Any strategy that includes inverse securities could cause the Fund to suffer significant losses.

The Fund may purchase ETFs and Underlying Funds that invest in “alternative asset” or “specialty” market segments. The risks and volatility of these investments are linked to narrow segments of the economy such as commodities, foreign currencies, or real estate, and may include leverage, which magnifies the changes in the value of the ETF or Underlying Fund.

ETF's are subject to specific risks, depending on the nature of the underlying strategy of the fund. These risks could include liquidity risk, sector risk, as well as risks associated with fixed income securities, real estate investments, and commodities, to name a few.

The Fund may invest in small, less well-known companies, which may be subject to more erratic market movements than large-cap stocks; foreign securities, which are subject to currency fluctuations and political, economic and market uncertainty; These risks may result in greater share price volatility. In addition, the use of leverage in an investment portfolio can magnify any price movements, resulting in high volatility and potentially significant loss of principal.

An investor’s overall cost of investing in the Fund will be higher than the cost of investing directly in Underlying Fund shares and the investor will indirectly bear fees and expenses charged by the Underlying Funds in addition to the Fund’s direct fees and expenses.

The Fund may invest in derivatives (Option Contracts). Even a small investment in options may give rise to leverage risk, and can have a significant impact on the Fund’s performance. Derivatives are subject to credit risk and liquidity risk.

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