The Cedar Ridge Unconstrained Credit Fund (CRUMX) recently celebrated its two-year anniversary, and has reasons to celebrate. The fund, which debuted on December 12, 2013, dramatically outperformed its peers in Morningstar’s Nontraditional Bond fund category in its first 24 months: $10,000 invested in the Cedar Ridge Unconstrained Credit Fund at inception would have grown to $10,967 as of December 11, 2015; whereas an equal amount invested in the average fund in Morningstar’s Nontraditional Bond fund would have shrunk to $9,978.
Uncorrelated Credit Exposure
On an annualized basis, the fund’s institutional shares (CRUMX) returned +4.73% through December 11, while its investor shares (CRUPX) returned +4.48%. In the tough month of November 2015, the Cedar Ridge Unconstrained Credit Fund returned +0.77%, while the Barclays Aggregate Bond Index fell by 0.26%. This continued the fund’s “particularly uncorrelated” returns during the market turmoil of the past few months: From July 31, 2015 through December 11, CRUMX had the following correlations:
- Barclays U.S. Aggregate Total Return Value Unhedged: -0.47
- Barclays U.S. High Yield Total Return Index Value Unhedged: 0.14
- S&P 500 Index: 0.23
Since its inception, CRUMX has had respective correlations of -0.19, 0.10, and 0.11 to the three indices above.
Fundamental Long/Short Credit Approach
The Cedar Ridge Unconstrained Credit Fund is managed by Cedar Ridge CIO Alan Hart and portfolio managers Jeffrey Rosenkranz, David Falk, Guy Benstead, and Jeffrey Hudson. The fund employs a credit long/short strategy that attempts to identify undervalued securities for its long positions, and “fully valued or overpriced” securities for its shorts. Security selection is based on a top-down analysis of the fundamental macroeconomic trends that influence the level and direction of interest rates and business cycles combined with a bottom-up, company-specific analysis to build and manage a portfolio designed to realize the fund’s total return investment objective.
The fund’s institutional-class shares have a 1.39% net-expense ratio and require a $50,000 initial minimum investment. The investor-class shares have a 1.64% net-expense ratio and require a $4,000 initial minimum investment.
For more information, read the fund’s prospectus.
Past performance does not necessarily predict future results.
Jason Seagraves contributed to this article.