Pearl Capital Advisors Launches Three New Programs
San Francisco-based volatility trader Pearl Capital Advisors has launched three new programs – Tactical Growth, Dry Powder and Synergy.
Tactical Growth is designed to capture 70% of S&P 500 of both up/down moves in typical market conditions and fully replace US equity exposure in a given client's portfolio; Dry Powder is a zero-management fee program designed to capture significant profits during times of extreme market volatility which holds cash to avoid chronic losses during non-volatility period; and Synergy is a multi-strategy combination of both of the new products and the existing Hedged VIX program.
The new products were made possible due to a $21mn seed from an existing investor.
“With the rounding out of our product offering, investors now have the choice to select how they would like to embrace volatility in their portfolios in this new volatility regime and beyond. They may elect to use volatility as a portfolio diversifier, as an equity replacement, as a tail-hedge, or all three in one", said Timothy R. Jacobson, Managing Partner at Pearl Capital. “Some clients are even looking to us to create bespoke combinations of our programs to meet specific exposure objectives. It is exciting to see how the investment community is finally coming around to seeing volatility differently. Volatility trading used to simply be viewed as either premium-selling on one hand or tail-hedge on the other. A revolution is well underway in how investors think about and solve for their portfolio construction challenges, the replacement of bonds, smarter ways to get equity exposure, and how to manage risk. Volatility trading is at the head of that effort and making it possible. We are on the forefront of those solutions and we are eager to show institutions, family offices, and individuals how to do that. The full arsenal of our capabilities really opens up the playbook for investors of what is now possible."
In describing each strategy, Jacobson continues. "Hedged VIX is our longest running program. It is designed to show negative correlation to all major asset classes. It should be the first allocation in a 60/40 portfolio or may well replace bonds altogether. Tactical Growth is designed to replace equities. It tactically adjusts to express a long or short view on the direction of the S&P and exhibits both beta and anti-bubble characteristics. Dry Powder turns the classic tail-risk approach on its head. Generally speaking, most tail-risk managers try to minimize 'bleed' by selling volatility elsewhere in their portfolio. While true this does minimize the cost of carry, these short-vol positions lose during volatility episodes. This reduces the gains these managers can make during these critical moments. Our approach is to only deploy long-vol positions when necessary. We aim to deliver a 'no-bleed' profile. In that same spirit, we don't even charge a management fee in that program. We truly want our clients to not incur any form of 'bleed'."
Lawson Stringer co-manages the strategies with Jacobson and is spearheading the firm's efforts to form a new fund around a multi-strat concept with the three stand alone programs. Stringer states, "the fund will be called the Synergy Fund as it harnesses all three strategies in one. Eventually, the fund will be open to both QEP and non-accredited investors alike."
© The Sortino Group Ltd
All Rights Reserved. No part of this publication may be reproduced, stored in a retrieval system or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or scanning or otherwise, except under the terms of the Copyright, Designs and Patents Act 1988 or under the terms of a licence issued by the Copyright Licensing Agency or other Reprographic Rights Organisation, without the written permission of the publisher. For more information about reprints from AlphaWeek, click here.