HAUPPAUGE, N.Y., June 9, 2014 /PRNewswire/ -- Gemini Fund Services, LLC (Gemini), an engaged partner to independent advisors as a provider of comprehensive, pooled investment solutions, has joined forces with KKM Financial (KKM) to launch the KKM ARMOR Fund (RMRAX, RMRIX) and KKM U.S. Equity ARMOR Fund (UMRAX, UMRIX). Gemini helped KKM bring the Funds to market through Northern Lights Fund Trust II.
"We are glad to work with KKM as part of our ongoing effort to deliver hedge-fund-like strategies, which have historically only been available to institutional and qualified investors, to retail investors, who can use them to potentially generate higher returns while hedging downside risk," said Andrew Rogers, Chief Executive Officer of Gemini. "Our extensive experience running back-office operations for derivative- and alternative-focused funds, along with our expertise in meeting these complex securities' compliance requirements, make us an ideal partner for KKM."
The KKM ARMOR Fund seeks to obtain capital appreciation and preservation with negative correlation to the broader U.S. equity market. The Fund, designed as a portfolio hedging tool, attempts to achieve its goals by primarily investing in long and short VIX futures contracts, and long and short call and put options contracts trading on the S&P 500 Index and the Chicago Board Options Exchange Volatility Index (VIX).
The investment vehicle's ARMOR Index, calculated and distributed by the Chicago Board Options Exchange, searches for relative value along the VIX futures curve, seeking to capture 70 percent of upside VIX movements and 30 percent of downside VIX movements. The proprietary ARMOR Index methodology is managed by KKM and the Fund's sub-advisor, Equity Armor Investments, LLC. Since implied volatility usually rises when stock prices drop, the Fund may provide a strong negative correlation to U.S. and international equity markets.
The KKM U.S. Equity ARMOR Fund utilizes a total return strategy and also incorporates elements of the KKM ARMOR Fund's tail-risk strategy. The Fund attempts to generate higher risk-adjusted returns with minimal equity market correlation. It seeks to meet its objective by primarily investing in large-cap U.S. stocks, VIX futures contracts, and long and short call and put options on VIX. The Fund's portfolio is tied to the U.S. Equity ARMOR Index, which is designed to create a portfolio consisting of large-cap S&P 500 stocks (82 percent) and holdings in the ARMOR Index (18 percent). The U.S. Equity ARMOR Index was created by KKM and the Fund's sub-advisor, Equity Armor Investments, LLC, and calculated and disseminated by the Chicago Board Options Exchange.
Gemini provides the Funds with administration, custody, transfer agent, and accounting services, which enable KKM to devote more time to managing the Funds and raising assets. Gemini is also working with the Funds' board of directors to ensure the Funds meet all necessary compliance standards. In addition to a board of directors, membership in Northern Lights Fund Trust II has given the Funds access to distribution and marketing plans prepared by Northern Lights Distributors, LLC, which is facilitating introductions to broker-dealers.
"The KKM ARMOR Fund seeks to offer investors a way to reduce portfolio volatility through tail-risk without negatively affecting performance, while the KKM U.S. Equity ARMOR Fund potentially enables investors to benefit from positive U.S. equity market performance, but also receive additional alpha in down markets," said Jeff Kilburg, Founder and CEO of KKM. "Thanks to Gemini, we have been able to successfully bring these uncommon alternative investment strategies to a much larger pool of investors."
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About Gemini Fund Services, LLC
Gemini Fund Services, LLC (www.geminifund.com) provides comprehensive, pooled investment solutions as an engaged partner to independent advisors. Gemini serves as a strategic partner and resource to advisors that want to bring their own, unique investment vehicles to market, including mutual funds, exchange-traded funds, funds on insurance platforms and more. As a full-service firm, Gemini provides the administration, accounting and technology that advisors need in order to launch and market successful products. With over 30 years of experience creating and servicing funds, Gemini brings years of industry knowledge and insight to help advisors achieve the vision of their product and deliver the most extensive range of solutions to clients.
About KKM Financial
KKM Financial is an Alternative asset management firm. Specializing in Liquid Alternative Investments, KKM Financial is an SEC Registered Investment Advisory Firm. The firm's paramount objective is to seek higher risk-adjusted returns with minimal market correlation. In tumultuous equity markets effective risk-management, vision, and flexibility are paramount, as well as rare.
KKM Financial brings vast experience and expertise in navigating market turbulence. KKM Financial was founded on the belief that investment success comes from in-house research and modeling, and that the portfolio manager should be held accountable for all investment decisions. KKM Financial welcomes the opportunity to offer their portfolio management abilities to the broader investing public via 1940 Act Funds. KKM Financial is an innovative industry-leader that has set a new global standard in the deployment of volatility and risk-management. For more information, please visit www.kkmfinancial.com.
Alpha: a risk-adjusted measure of the active return on an investment. It is a measure of the manager's contribution to performance.
Chicago Board Options Exchange Volatility Index: a widely used measure of market risk that is meant to be forward looking and calculated from calls and puts. It shows the market's expectations of 30-day volatility.
Long Position: buying an asset or security such as a stock, commodity, or currency that gives partial ownership to the buyer of the position with the expectation that the asset will rise in value.
S&P 500® Index: an unmanaged composite of 500 large capitalization companies. This index is widely used by professional investors as a performance benchmark for large-cap stocks.
Short Position: buying an asset or security such as a stock, commodity, or currency that gives partial ownership to the buyer of the position with the expectation that the asset will decrease in value.
Tail-risk: a portfolio risk when the chance an investment will move more than three standard deviations from the mean is greater than what is shown by normal distributions.
VIX Options: non-equity option that uses the Chicago Board Options Exchange Volatility Index as the underlying asset.
You cannot invest directly in an index and unmanaged index returns do not reflect any fees, expenses, or sales charges.
There is no assurance that the Fund will achieve its investment objective.
Mutual Funds involve risk including the possible loss of principal. Domestic economic growth and market conditions, interest rate levels and political events are among the factors affecting the securities markets in which the Fund invests. A higher portfolio turnover due to active and frequent trading will result in higher transactional and brokerage costs. Large-capitalization companies usually cannot respond as quickly as smaller companies to competitive challenges, and their growth tends to lag the growth of well-managed smaller companies during strong economic periods. When the Fund purchases a call option on a security or index it may lose the entire premium paid if the underlying security or index does not increase in value. When the Fund purchases a put option on a security or index it may lose the entire premium if the underlying security or index does not decrease in value. Investments in futures involve leverage, which means a small percentage of assets invested in futures can have a disproportionately large impact on the Fund. Futures contracts may become mispriced or improperly valued when compared to the adviser's expectation and may not produce the desired investment results.
Investments linked to equity volatility indexes can be highly volatile compared to investments in traditional securities and the Funds may experience large losses. In general, the price of a fixed income security falls when interest rates rise. Hedging is a strategy which uses a derivative to offset the risks associated with other Fund holdings. There can be no assurance the hedging strategy will reduce risk or that hedging transactions will be either available or cost effective. ETFs 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. ETNs are subject to credit risk and their value will be influenced by time to maturity, supply and demand, volatility and lack of liquidity in underlying commodities markets, changes in interest rates, changes in the issuer's credit rating, and economic, legal, or political events. To the extent the Fund invests in ETFs that seek to provide investment results that are the inverse of the performance of an underlying index, the Fund will indirectly be subject to the risk that the performance of such ETF will fall as the performance of that ETF's benchmark rises. The use of leverage to acquire underlying portfolio investments may exaggerate changes in an ETF's share price and the return on its investments. Investments by the Fund in inverse and leveraged ETFs may magnify changes in the Fund's share price and thus result in increased volatility of returns. Derivative instruments involve risks different from, or possibly greater than, the risks associated with investing directly in securities and other traditional investments.
The use of leverage by the Fund or an Underlying Fund, such as borrowing money to purchase securities or the use of derivatives, will indirectly cause the Fund to incur additional expenses and magnify the Fund's gains or losses. Non-diversification risk, as the Funds are more vulnerable to events affecting a single issuer. Changes in the laws or regulations of the United States or other countries, including any changes to the applicable tax laws and regulations, could impair the ability of the Fund to achieve its investment objective and could increase the operating expenses of the Fund. No assurance can be given that the U.S. Government will provide financial support to its agencies and authorities if it is not obligated by law to do so. The value of U.S. Government securities may be affected by changes in the credit rating of the U.S. Government. There is no guarantee that the Portfolio's income will be exempt from federal or state income taxes. The Fund will incur a loss as a result of a sold option, also referred to as a short position, if the price of the sold option instrument increases in value between the date when the Fund sells the option and the date on which the Fund purchases an offsetting position. Similarly, the Fund will incur a loss as a result of a written option if the price of the written option instrument increases in value between the date when the Fund writes the option and the date on which the Fund purchases an offsetting position.
Investors should carefully consider the investment objectives, risks, charges and expenses of the KKM ARMOR Funds. This and other important information about the Fund is contained in the prospectus, which can be obtained by calling 1-844-767-3863. The prospectus should be read carefully before investing. The KKM ARMOR Funds are distributed by Northern Lights Distributors, LLC, Member FINRA. KKM Financial, LLC and Equity Armor Investments, LLC are not affiliated with Northern Lights Distributors, LLC.
- Mutual Funds
- Chicago Board Options Exchange