Looking to generate low risk income?
Consider the Merger-Arbitrage strategy
from Constantia Capital.
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Merger-Arb is an excellent strategy to diversify your fixed-income portfolio away from intermediate and long-term bond funds which are very susceptible to rising interest rates, and shorter-term money market funds which earn low returns.
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The current environment, with an above average number of deals, has enabled us to generate returns ahead of our benchmark (3 month SOFR) in the past 12 months. With fees of only 70 basis points, this is the same time-tested strategy employed by hedge funds, now available at a fraction of their fees and with no lockups. Simply open your own SIPC-insured account at your favorite discount broker ($110,000 minimum), assign trading authority to Constantia Capital, and get the benefit of your broker's low rates and our portfolio management expertise. Click here to request a detailed presentation.
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The Constantia Capital "Merger-Arb" strategy is a short duration, low volatility strategy that is designed as an high yielding alternative to cash in the bank or short-term debt. Volatility is similar to that of a U.S. Government 10-year Treasury Note.
This strategy invests in definitively announced mergers. We follow a highly disciplined process to keep risk low.
Performance
Since its inception in November 2011, the Constantia Capital Merger-Arbitrage strategy has earned 5.44% annualized (net of fees) with a 0.88 Sharpe Ratio. See More Details About Merger-Arbitrage Performance
Advantage of Separately Managed Accounts
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No drag on performance due to trading to meet cash flows of other investors. This is especially important for Merger-Arb where the bid-ask spread can make the difference between an attractive trading opportunity.
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Lower overhead since no fund accounting fees. As a result, our fees are the lowest in the category, lower than either ETF’s or Mutual Funds (and obviously lower than Hedge Funds).
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We estimate the above two points provide an advantage over a fund structure of at least 50 bps annualized, more when comparing to higher fee competitors.
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Choice of fee structure: either a flat rate (70 bps) or performance based (“0 and 20”).
*Please note that Expected Excess Returns (a) are not a guarantee of performance and (b) will include reinvestment of dividends and other earnings.
¹ Discounted fees are available to accounts over $25 million.
² Performance Fee is charged on excess over benchmark, with high-water marks, and available only to qualified clients as defined by Rule 205-3 of the Investment Advisers Act of 1940 (17 CFR 275.205-3).
Risk Controls
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Highly diversified portfolio with over 100 positions (as of Q4 2024). Positions size may not exceed 5% of the portfolio, but we seldom come close to that limit with the average position being less than 1% of the portfolio.
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Leverage may be used (for traditional accounts) but will not exceed 2.0.