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Alternative Market Briefing

The Probabilities Fund: Trend Following in '40 Act mutual fund format

Tuesday, August 27, 2013

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Joe Childrey
Bailey McCann, Opalesque New York:

The original Probabilities Fund was started in 2008, by Joe Childrey, as a trend following strategy. Like many of his hedge fund cohorts, Childrey has also launched a ’40 act fund to capture investments from retail investors. He spoke about this move in a recent Opalesque TV interview.

"May of 2013, we started our 40 Act Fund, which is a clone of the Probabilities Fund. And remarkably, we called that the Probabilities VIT Fund, Variable Insurance Trust is the VIT. Many people haven’t heard of a VIT, a Variable Insurance Trust; this is a 40 Act Fund found inside variable annuities, such as the Jefferson National and Security Benefit, which is part of Guggenheim Annuity. This allows me to have a 40 Act Fund for investors that are concerned about taxes, because there are no capital gains inside the variable annuity," Childrey explains.

"The strategy is essentially trend following. We trade the S&P 500 Index. We are either in, out, leveraged, or short. So, it’s a directional fund; we are not hedging. We are making bets on market."

Childrey notes that much of this approach stems from a personal interest in seasonal investment behaviors. Instead of just focusing on old axioms like 'sell in May and go away,’ he focuses on when to be in markets rather than just out. "We found that like a lot of things in life, ther......................

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