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MNI (Market Neutral Income Fund) - Coggle Diagram
MNI (Market Neutral Income Fund)
Principal Investment Strategies
Benefits
Alternative strategies to actively manage equity beta and volatility
Absolute, total return over varying market cycles
Diversification of marketable securities allocation
Principal strategies:
the 2 of them are sources of risk/return mangement
1. Convertible Arbitrage
: Long convertible securities and short underlying common equity of issuer to hedge equity risk
Portfolio weight: 37%
2. Hedged Equity
: Option Premium from writing (selling) call options, sell calls and buy protective puts against long equity portfolio
Portfolio weight: 51%
Opportunities Investment Strategies
(Sometimes used)
Used to enhance the objectives of the principal strategies
Utilized when conditions are favorable
Limited in their allocations by prospectus
Strategy
SPAC Arbitrage:
Source cheap optionality by purchasing SPACs at or below their trust value and existing when they reach target range of $10.50-$11
Portfolio weight: 10%
Merger Arbitrage
Source completion risk premium received from announced mergers by owning long convertibles and equities before the merger is completed
Portfolio weight: 2.5%