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Introduction of the new K&L Rock Drawdown Hedge Fund 2023

Published by: 27.04.2023 15:26:43

We have been thinking about expanding our portfolio of financial products for a long time. After much preparation, back-testing and a trial period, we are launching a new fund called the K&L Rock Drawdown Hedge Fund 2023 from 1 May 2023. Its purpose will be to outperform the market benchmark, which we consider to be the S&P500. 


Depending on the setup, the money invested in the fund will be exposed to the same or less risk than the general market. On the other hand, the results according to historical backtests should playfully outperform the S&P500 index. The fund is open to all clients and we believe in rapid capital growth and in successfully surpassing the performance targets we have set.

 

 

Fund Strategy: 

 

K&L Rock executes the Fund's trades on a daily frequency by trading equity derivatives such as futures, ETFs, index ETFs, index options, futures options and equities. We operate with internal leverage. The value of the underlying asset is multiplied by a multiplier. We use financial leverage as a natural part of our trading strategy. The main currency of the fund (DDH) is USD as the main geographic distribution is in the US on the CME Group and NYSE exchanges. We select the largest and safest instruments available in the market. The basic principles of the strategy are based on buy and hold fundamentals. In the event of high volatility in critical situations, we complement the strategy with option and hedging strategies. The most important attributes include risk management and position sizing. There are defined rules that change depending on market conditions. The fund operates with reinvestment of returns; interest income is an important aspect contributing to overall performance.


The Fund may approach the market during high volatility by using trading strategies that have long and short positions to limit the risk of market downturns and thus improve the overall P/E ratio.

 

 

Investment goals:


We have constructed the Drawdown Hedge Fund (DDH) to effectively participate in the long-term performance of a stock market that is fundamentally growth oriented. Using our experience and various tools, we systematically contribute to outperforming the market standard.
The Drawdown Hedged Fund aims to outperform the average performance of the stock market over the last 30 years and therefore the S&P 500 benchmark, which is 10.7%. 


The secondary objective is to manage downside risk and get to lower average drawdowns than the benchmark. The Drawdown Hedge Fund can outperform the benchmark efficiently and with the same risk as the regular market. The target return is expected to be 15% per annum and above.

 

Drawdown:

 

A drawdown represents a decline from the top level of our trading account or (equity) strategy performance. We consider the drawdown ratio of the S&P500 vs. DDH to be the main differential advantage. When the drawdown is several times lower than the benchmark, we can effectively use a multiplier. By using leverage, we simultaneously increase performance and also drawdowns. In this setup, the fund takes less or equal market risk than the benchmark while outperforming the benchmark.

 

A link to download the Factsheet can be found here: klrock.com/en/funds/fund-ddh/

 

All materials and information on the K&L Rock website are drawn from publicly available sources and are for informational purposes only. Every care has been taken in their creation. The information published on K&L Rock's website is in no way intended to be legal, tax or investment advice, analysis or suggestions or offers to buy or sell investment instruments, the implementation of which may result in the loss of all invested assets. The investment recommendations so indicated are for informational purposes only and are not binding. In no event shall K&L Rock be liable for any damages that may arise in connection therewith. Therefore, only use companies licensed by the CNB or with a valid permit to operate in the Czech Republic for trading in investment instruments.

K&L Rock also declares that it is not liable for any direct or indirect damage resulting from trading on the capital markets in general, and posts in discussions expressing the views of readers may not be in line with the operator's position and therefore cannot be regarded as its views.

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