In this episode of Strategic Investor Radio, host Charley Wright sits down with Greg Rutherford, co-founder and CEO of Cavalier Funds. Cavalier operates a family of seven mutual funds each managed by sub-advisors. The fund family consists of five equity and two fixed-income funds, each of which aim to capture benchmark returns in rising markets, while protecting assets in declining markets.
Rutherford says Cavalier selects sub-advisors who have demonstrated strong relative returns in the past, and he says that he is proud of his firm’s relationship with its sub-advisors. Cavalier’s earliest funds are approaching six years old, while the bulk of the remaining funds are nearly four years old. For the first 11 months of 2016, the firm’s best-performing fund, in absolute terms, was its Global Opportunities Fund (CATEX), which gained 10.19%. In relative terms, Cavalier’s best performer was its Adaptive Income Fund (CADTX), whose 5.01% gains ranked in the top 4% of its category.
As Charley notes, Strategic Investor Radio likes to highlight the type of investments you normally don’t hear about on Bloomberg, Fox Business, or CNBC; and Cavalier’s funds are no exception to this general rule: While “99% plus” of mutual funds are “buy and hold” (according to Charley), Cavalier’s funds eschew convention in favor of “adaptive correlation,” which Charley describes as “basically a reactive method; reacting to market conditions – not buy and hold.”