Trading Strategy: Systematic / Relative Value / Indices / 4.7 Exempt / QEPs Only
Program Description: The Pearl Capital Advisors, LLC (“Pearl”) Hedged VIX Program (the “Program””) was built by Pearl, an independent alternative investment arm of a California-based family office, to seek greater diversification and a unique source of alpha. The Program is a futures-based, non-directional, and systematic strategy which seeks to monetize the mispricing of risk between implied volatility and realized volatility. Due to behavioral biases, investors routinely purchase unneeded investment protection during “risk-on” environments and fail to purchase needed protection during “risk-off” periods. This mispricing of risk is observable, is both behavioral and structural in nature, and is persistent over time. Pearl structures trades which isolate both over/under mispricings and strip out market direction bias in the process. The result is a strategy which not only has the ability to provide solid returns in rising markets, but also has tail-risk-like properties to generate outsized returns during market turmoil. Therefore, the Program is designed to be “all-weather” and absolute return in nature. The Program boasts negative correlation to the S&P 500 and is also uncorrelated to CTAs, fixed income, and volatility strategies. The Program delivers true diversification and can benefit even the most diversified institutional portfolios. The Program is subject to a variety of risks, including but not limited to: investments may be speculative and subject to a high degree of risk; investments may be illiquid; an investor could lose all or a substantial amount of any investment in the Program.