Long / Short Equities

Investing in Equities

Equities are well known investments that have been a core holding in individual investor portfolios for decades. Over the last 26 years, equities have provided investors with an average annual return of 10%. However, as the chart below illustrates, with this performance came significant volatility. This has led investors to search for new opportunities that might allow them to better limit the downside, while still participating in the return potential of the upside.

Growth of $1,000 Investment - January 1, 1991 to June 30, 2016

Past performance is not a guarantee of future results. The referenced indices are shown for general market comparisons and are not meant to represent the Fund. One cannot invest directly in an index. The Long/Short Equity Fund is new and does not have a performance history. Fund performance, once available, may be obtained by calling 1.855.LCFUNDS (1.855.523.8637). U.S. Stocks refers to S&P 500 Total Return Index. Source: Morningstar Direct

Potentially a Better Way to Diversify

This is where Long/Short Equity investments can come into play. A Long/Short Equity strategy involves taking
long positions in stocks that are expected to increase in value and short positions in stocks that are expected to
decrease in value. With this approach, an investor has the potential to profit in both bull and bear markets. Since 1991, there have been four years where the S&P 500 produced negative returns. As shown in the chart below, during those same four years a Long/Short Equity strategy was significantly more beneficial by only capturing 11.5% of the downside. As a result of this, investing in a Long/Short Equity Fund can help limit the downside due to the potential for reduced volatility.

 

*For the period of February 1, 1990 through December 31, 1990. The reference to indices are shown for general market comparisons and are not meant to represent the Fund. Long Equity refers to S&P 500 Index, Long/Short Equity refers to CISDM Long/Short Equity Index. Up Capture compares an investment's performance against its benchmark during periods when the benchmark's performance is positive, while Down Capture compares the investment's performance against the benchmark during periods when the benchmark's performance is negative. A value of greater than 100% indicates that the investment captured more return than the benchmark (this is a positive for Up Capture, however, a negative for Down Capture). Conversely, a value less than 100% means the investment captured less return than its benchmark (a positive for Down Capture, but a negative for Up Capture). Source: LoCorr Funds

 

Potential for Enhanced Returns

Past performance shows that Long/Short Equity strategies have significantly outperformed the long-only
S&P 500 in both bull markets and crisis periods. As we have shown, Long/Short Equity strategies possess the
potential to deliver strong returns in a variety of markets, as well as the capability of generating lower volatility when compared to traditional long-only equity funds.

 

Period: 2/1/1990-6/30/2016. Long/Short Equity refers to CISDM Equity Long/Short Index; Long-only Equity refers to S&P 500 Total Return Index. Source: Morningstar Direct

S&P 500 Total Return Index is a capitalization weighted unmanaged benchmark index that includes the stocks of 500 large capitalization companies in major industries. This total return index includes net dividends and is calculated by adding an indexed dividend return to the index price change for a given period. CISDM Equity Long/Short Index demonstrates the median return of hedge funds with long and/or short directional strategies in equities. Such hedge funds typically take long or short positions in equities and may simultaneously use hedging strategies with futures and options.  Only hedge funds that have reported net returns for the particular month are included in the index calculation.
Diversification does not assure a profit nor protect against loss in a declining market.
Past performance is not a guarantee of future results. The referenced indices are shown for general market comparisons and are not meant to represent the Fund. U.S. Stocks are represented by S&P 500 Index, and Managed Futures represented by Barclays CTA Index. One cannot invest directly in an index.
The Fund's investment objectives, risks, charges and expenses must be considered carefully before investing. The statutory prospectus contains this and other important information about the investment company, and it may be obtained by calling 1.855.LCFUNDS, or visiting www.LoCorrFunds.com. Read it carefully before investing.
Mutual fund investing involves risk. Principal loss is possible. The Fund is non-diversified, meaning it may concentrate its assets in fewer individual holdings than a diversified fund. Therefore, the Fund is more exposed to individual stock volatility than a diversified fund. The Fund invests in foreign investments and foreign currencies which involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks are greater   for emerging markets. The Fund may make short sales of securities, which involves the risk that losses may exceed the original amount invested. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. Investments in small- and medium-capitalization companies involve additional risks such as limited liquidity and greater volatility. Investments in lower-rated and non-rated securities presents a greater risk of loss to principal and interest than higher-rated securities. ETF investments are subject to investment advisory and other expenses, which will be indirectly paid by the Fund. As a result, the cost of investing in the Fund will be higher than the cost of investing directly in ETFs and may be higher than other mutual funds that invest directly in stocks and bonds. ETFs are subject to specific risks, depending on the nature of the ETF.
LoCorr Distributors, LLC is a broker dealer affiliated with LoCorr Funds. LoCorr Distributors, LLC has no affiliation with Quasar Distributions, LLC. The LoCorr Funds are distributed by Quasar Distributors, LLC.
© 2016 LoCorr Fund. All rights reserved.