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CAGF

Celernus Absolute Growth Fund (CAGF) is a long/short equity fund which seeks to provide attractive returns with below average volatility across the market cycle. To do this, the Fund will invest in a concentrated basket of North American equities. On an opportunistic basis, the Fund will also periodically sell short a basket of equities. The goal of the Fund is to select securities that will capture much of the benefit of rising equity markets while reducing the downside volatility associated with broad-based selloffs.

At Celernus, we seek to continuously understand four situations:
1. The long-term market cycle – Are we in a bull or bear market?
2. The mid-term market cycle – Is the current bull/bear market overextended?
3. The subset of investment opportunities - Which stocks with improving earnings profiles are poised to benefit from the current market cycle?
4. What is the realistic downside risk of the Fund?

To better understand each of the four situations, we have built quantitative models to illustrate precedent and provide context to the decision-making process. In fact, we would say that our proprietary insights at Celernus are quantitative.
 
The long-term cycle is measured and defined through several economic data series including measures of employment, broad-based activity and risk. An economy that is exhibiting positive growth, meaningful activity with minimal levels of credit risk has historically mapped to attractive equity market returns.
 
The mid-term cycle is identified through price charts.  Markets in motion have the propensity to revert to their mean trend levels following periods of extension. We manage our net-long stance according to this principle.
 
At Celernus Investment Partners we are discretionary fund managers.  However, our equity selection process is driven by extensive quantitative research. Our research has shown that equities with improving earnings profiles tend to outperform those with deteriorating profiles. With this in mind, we consistently seek to own equities with earnings profiles that align with this philosophy (while shorting equities with deteriorating profiles.)
 
The Fund is constructed with high levels of active risk. In other words, the Fund is not built to look like any of the broad-based equity market indices. We recognize the benefits of diversification and seek to maintain appropriate levels of it.  However, we also recognize that the subset of managers that have historically added alpha across an entire market cycle have done so with portfolios exhibiting meaningful active risk.
 
Finally, we are continuously seeking to better understand the risk profile of the Fund. We perform stress-tests across numerous time and market conditions to provide superior insights into the short-term volatility that might be anticipated from the Fund during various market regimes.
 
Please note that the Fund is available exclusively to accredited investors. More information about the Fund can be found in the Fund’s Trust Indenture, term sheet.