Braddock Multi-Strategy Income Fund
BDKNX, BDKCX, BDKAX
Top Holdings Braddock
|As of 6/30/17||% of Portfolio|
|GSRPM MTG TR 2004-1 VAR RT 09/25/42||4.31%|
|CWMBS INC 2005-3 VAR RT 04/25/2035||2.19%|
|HOME PARTN AMER TR 2 VAR RT 07/17/22||2.13%|
|STRUCT AGENCY CREDIT VAR RT 10/25/2027||2.05%|
|GSR MTG TR 2004-7 VAR RT 06/25/34||2.00%|
|CAS 2016-C01 1M2 VAR RT 8/25/2028||1.80%|
|CWMBS INC 2004-HYB3 VAR RT 06/20/34||1.70%|
|BA ALTERNATIVE LN TR VAR RT 07/25/34||1.62%|
|WIND RIVER CLO LTD VAR RT 7/15/2026||1.60%|
|STEELE CREEK CLO LTD VAR RT 08/21/2026||1.59%|
The Fund seeks total return with an emphasis on providing current income.
Primarily, the Fund will invest in asset-backed debt securities, with a focus on mortgage-related securities. The Fund may also invest a portion of the portfolio in collateralized loan obligations. Interest rate duration is short given Fund holdings primarily have floating rate coupons. The Fund has the ability to take short positions to dampen volatility or to express relative value views. Asset-backed debt securities represent interests in “pools” of mortgages or other asset based loans, including securities backed by assets such as residential and commercial real estate, senior secured bank loans, credit card and business receivables, student loans, personal and consumer loans and automobile loans.
Braddock Financial, LLC, the sub-advisor to the Fund, is an SEC registered investment advisor founded in 1994. Braddock has managed various private investment partnerships and separately managed accounts that invested in asset-backed debt securities. The Fund offers retail investors access to a distinctive fixed income strategy, previously available only through a private limited partnership but converted into this mutual fund on December 31, 2015.
The Fund’s portfolio managers will select securities they believe are undervalued, demonstrate attractive risk/reward profiles, and aim to provide investors a consistent return in various interest rate environments. Braddock performs an extensive bottom-up analysis of the market and evaluates the following variables in assessing each potential position.
- Deal structure and asset credit support
- Quality of the collateral that underlies the security
- Diversification across collateral characteristics
- Capital appreciation opportunity
- Duration risk
The Fund focuses on securities that will achieve the target of a short duration and low interest rate risk profile by investing primarily in floating rate securities. Additionally, the Fund invests predominantly in non-investment grade securities that aim to provide a higher level of income relative to broader fixed income markets, while remaining relatively liquid, within a market of investors such as insurance companies, institutional investors and pension plans. Braddock maintains relationships with institutional broker-dealers that have top tier access to and competitive pricing for these securities.
IMPORTANT RISKS & DISCLOSURES
Before investing you should carefully consider the Braddock Multi-Strategy Income Fund’s investment objectives, risks, charges and expenses. This and other information about the Fund is in the prospectus and summary prospectus, a copy of which may be obtained by calling 800-207-7108 or by visiting the Fund’s website at www.libertystreetfunds.com. Please read the Fund’s prospectus or summary prospectus carefully before investing.
An investment in the Braddock Multi-Strategy Income Fund is subject to risk, including the possible loss of principal amount invested and including, but not limited to, the following risks, which are more fully described in the prospectus: Mortgage-backed securities: subject to “prepayment risk” (the risk that borrowers will repay a loan more quickly in periods of falling interest rates) and “extension risk” (the risk that borrowers will repay a loan more slowly in periods of rising interest rates). If the Fund invests in mortgage-backed or asset-backed debt securities that are subordinated to other interests in the same pool, the Fund may receive payments only after the pool’s obligations to other investors have been satisfied. The risk of defaults is generally higher in the case of mortgage pools that include so-called “subprime” mortgages. Real estate risk: property values may fall due to increasing vacancies or declining rents resulting from unanticipated economic, legal, employment, cultural or technological developments. CLO risk: Collateralized Loan Obligations (CLOs) largely depend on the type of underlying collateral securities and the tranche in which the Fund invests. While CLOs are subject to the typical risks associated with debt instruments (i.e., interest rate risk and credit risk), the Fund is also subject to asset manager, legal and regulatory, limited recourse, liquidity, redemption, and reinvestment risks as a result of the structure of CLOs in which the Fund may invest. Credit Risk: securities held by the Fund could be subject to credit risk, including factors that may impair the credit rating and which may cause the value of the Fund’s investment to decline. Interest rate risk: your investment may go down in value when interest rates rise, because when interest rates rise, the prices of bonds and fixed rate loans fall. Generally, the longer the maturity of a bond or fixed rate loan, the more sensitive it is to this risk. Falling interest rates also create the potential for a decline in the Fund’s income. These risks are greater during periods of rising inflation. High Yield (“Junk”) bond risk: junk bonds are speculative investments which involve greater risk of default, downgrade, or price declines, can be more volatile and tend to be less liquid that investment-grade securities. Repurchase agreement risk: may be viewed as loans made by the Fund which are collateralized by the securities subject to repurchase. The Fund’s investment in repurchase agreements may be subject to market and credit risk with respect to the collateral securing the repurchase agreements. Reverse repurchase agreement risk: reverse repurchases provide the Fund with cash for investment purposes, which creates leverage and subjects the Fund to the risks of leverage. Reverse repurchase agreements also involve the risk that the other party may fail to return the securities in a timely manner or at all. Liquidity risk: the Fund may not be able to sell some or all of the investments that it holds due to a lack of demand in the marketplace or other factors such as market turmoil. The sales price the Fund could receive for any particular portfolio investment may differ from the Fund’s valuation of the investment, particularly for securities that trade in thin or volatile markets or that are valued by the Fund using a fair value methodology due to the fact that illiquid assets may be difficult to value. Leverage risk: as a result of borrowing or other investment techniques, the Fund may be leveraged. Leverage creates exposure to gains and losses in a greater amount than the dollar amount made in an investment. Derivatives risk: derivative instruments, futures contracts, options, swap agreements, and/or selling securities short involve risks different from direct investment in the underlying assets, including but not limited to: futures contracts may cause the value of the Fund’s shares to be more volatile; the Fund may not fully benefit from or may lose money on option or shorting strategies; swaps may be leveraged, are subject to counterparty risk and may be difficult to value or liquidate. Non-diversification risk: as a non-diversified fund, the Fund may focus its assets in the securities of fewer issuers, which exposes the Fund to greater market risk that if its assets were diversified among a greater number of issuers.
The Fund may not be suitable for all investors. We encourage you to consult with appropriate tax and financial professionals before considering an investment in the Fund.