Navigator® Equity Hedged Fund
Chief Investment Officer & Lead Portfolio Manager
K. Sean Clark, CFA
Director of Research
David J. Rights
Mason D. Wev, CFA
Our investment philosophy is based on two fundamental beliefs.
- The collective wisdom of the market is consistently more accurate than any one investment strategy. The daily action of market participants creates inertia, revealing a directional ebb and flow, which is translated through price. The essence of our research measures the “relative strength” of this movement in price which allows us to adapt to changing themes and is not biased to a traditional style or market capitalization approach.
- Volatility can be managed to defuse correlation spikes across other asset classes. When “relative strength analysis” and “managed volatility” are used in tandem, investors are able to participate in asset class leadership and long-term global themes while benefiting from a non-correlated asset, which assists in risk management and capital preservation.
The investment process begins with a disciplined, quantitative analysis of relative strength across three subsets of the global equity markets:
- U.S. market capitalizations and styles
- Industry sectors and sub-groups
- International countries and regions
Portfolio Managers systematically measure each security versus every security within a targeted universe. The top two quartiles are then identified as an investable idea and then optimized to separate real trends or themes from “market noise.” Lastly, each buy candidate is analyzed for external events, liquidity constraints and overall diversification needs.
A strategic hedge using an allocation to exchange traded products based upon the CBOE Volatility Index (VIX) to manage volatility. The Fund’s management philosophy is driven by a single-minded focus: superior risk-adjusted long-term performance. Controlling portfolio volatility is the key to achieving this goal.
- Provide a hedge against significant market-driven declines
- Volatility provides negative correlation to the market in all market environments
- Provide systematic risk management without forecasting or market timing influence
*Correlation is a measure of how asset classes move in relation to each other. In perfect positive correlation of two assets classes, a 1% rise in one is mirrored by a 1% rise in the other; the same is true of declines. When asset classes are negatively correlated, they move opposite to one another. Within a portfolio, negatively correlated asset classes have a great potential for reducing risk.